Oppenheim v Tobacco Securities Trust Co Ltd [1950] UKHL 2

House of Lords
Between
OppenheimAppellantTobacco Securities Trust Co LtdRespondent
Before
Lord SimondsLord NormandLord OakseyLord Morton of HenrytonLord Mac-Dermott
[1]Die Mercurii, 13° Decembris 1950 Parliamentary Archives, HL/PO/JU/4/3/1003 HOUSE OF LORDS OPPENHEIM v. Lord Simonds Lord Normand Lord Oaksey Lord Morton of Henryton Lord Mac- Dermott TOBACCO SECURITIES TRUST COMPANY LIMITED AND OTHERS 13th December. 1950 Lord Simonds MY LORDS, Once more your Lordships have to consider the difficult subject of charit- able trusts, and this time a question is asked to which no wholly satisfactory answer can be given. 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 amalga- mation of the Company such other persons as were therein mentioned, in which event a variation was made also in the beneficiaries under the trust. 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. In these circumstances the question arose whether the trust that 1 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 Respon- dent Bank, since in the event of invalidity there is a resulting trust of the trust premises to the estates of the grantors. 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 com- panies was large. It exceeded 110,000. This question coming before Roxburgh J. in the Chancery Division, it was conceded and he held that, having regard to the decisions of the Courj of Appeal in In re Compton [19451, 1 Ch. 123 and In re Hobourn Aero Components Limited's Air Raid Distress fund [19461, 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 2 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 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 119491, A.C.. 426, this principle was reasserted. It is easy to state and has been stated in, a4 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. . . ."
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. 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 (1 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. 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 former case, In re Compton, Lord Greene M.R. had by way of illustration placed members of a family and employees of a particular employer on the same footing, finding neither in common 3 kinship nor in common employment the sort of nexus which is sufficient, My Lords, I am so fully in agreement with what was said by Lord Greene in both cases and by my noble and learned friend, then Lord Justice Morton. in the Hobourn case, that 1 am in danger of repeating without improving upon their words. No one who has been versed for many years in this difficult and very artificial branch of the law can be unaware of its illogicalities, but I join with my noble and learned friend in echoing the observations which he cited from the judgment of Lord Justice Russell in In re Grove-Grady and I agree with him that the decision in In re Drummond " imposed a very healthy check upon the extension of the legal definition " of ' charity ' ". It appears to me that it would be an extension, for which there is no justification in principle or authority, to regard common employ- ment as a quality which constitutes those employed a section of the community. It must not, I think, be forgotten that charitable institutions enjoy rare and increasing privileges, and that the claim to come within that privileged class should be clearly established. With the single exception of In re Rayner 122 L.T. 577, which I must regard as of doubtful authority, no case has been brought to the notice of the House in which such a claim as this has been made, where there is no element of poverty in the beneficiaries, but just this and no more, that they are the children of those in a common employment. Learned counsel for the Appellant sought to fortify his case by pointing to the anomalies that would ensue from the rejection of his argument. For, he said, admittedly those who follow a profession or calling, clergymen, lawyers, colliers, tobacco-workers and so on are a section of the public; how strange then it would be if, as in the case of railwaymen, those who follow a particular calling are all employed by one employer. Would a trust for the education of railwaymen be charitable, but a trust for the education of men employed on the railways by the Transport Board not be charitable? And what of service of the Crown whether in the civil service or the armed forces? Is there a difference between soldiers and soldiers of the King? My Lords, I am not impressed by this sort of argument and will consider on its merits, if the occasion should arise, the case where the description of the occupation and the employment is in effect the same, where in a word, if you know what a man does, you know who employs him to do it. It is to me a far more cogent argument, as it was to my noble and learned friend in the Hobourn case, that if a section of the public is con- stituted by the personal relation of employment, it is impossible to say that it is not constituted by 1,000 as by 100,000 employees, and, if by 1,000, then by 100. and, if by 100, then by 10. I do not mean merely that there is a difficulty in drawing the line, though that too is significant: I have it also in mind that, though the actual number of employees at any one moment might be small, it might increase to any extent, just as, being large, it might decrease to any extent. If the number of employees is the test of validity, must the Court take into account potential increase or decrease, and. if so, as at what date? I would end, my Lords, where I began, by saying that I concur in the reasoning of the Court of Appeal in the Hobourn case, but there are cer- tain points in the argument for the Appellant about which I should say a few words. It was urged by counsel for the Attorney-General, who was allowed to address the House, that there was here a valid charitable trust created, since there was no private person who could sue to enforce the trust. I am not persuaded that this would be so, if the trust were otherwise enforceable. But in any case the test is not a valid one. If this trust is charitable, the Attorney-General can sue to enforce it: it does not follow that it is charitable because no one else can sue to enforce it. I would also, as I have previously indicated, say a word about the so-called " poor relations " cases. I do so only because they have once more been brought forward as an argument in favour of a more generous view of what may be charitable. It would not be right for me to affirm or to denounce or to justify these decisions: I am concerned only to say that the law of charity, so far as it relates to " the relief of aged, impotent and " poor people " (I quote from the statute) and to poverty in general, has followed its own line. ,and that it is not useful to try to harmonise decisions A2 4 on that branch of the law with the broad proposition upon which the deter- mination of this case must rest. It is not for me to say what fate might await those cases if in a poverty case this House had to consider them; But, as was observed by Lord Wright in Admiralty Commissioners v. Valverda [1938], A.C. 173 at 194, while " this House has no doubt power to " over-rule even a long established course of decisions of the Courts, provided " it has not itself determined the question ", yet " in general this House "will adopt this course only in plain cases where serious inconvenience " or injustice would follow from perpetuating an erroneous construction or " ruling of law ". I quote with respect those observations to indicate how unwise it would be to cast any doubt upon decisions of respectable anti- quity in order to introduce a greater harmony into the law of charity as a whole. The appeal should in my opinion be dismissed with costs. Lord Normand my lords. The trust is an educational trust and it therefore satisfies one of the conditions for acceptance as a charitable trust. But there is another con- dition which must also be satisfied, that it is a trust beneficial to the community or to a section of the community. No general rule has yet been formulated by which to distinguish trusts which have this essential element of public benefit and those which have not, and the valiant attempts of Counsel to arrive at a rule have failed to convince me. I am, however, satisfied that the element of public benefit must be found in the definition of the class of persons selected by the truster as the objects of his bounty. That seems to me to follow from the principle that the trust purpose must be directed to the benefit of the community or a section of the community. (Tudor on Charities 5th Edn. p. 11, approved by the Master of the Rolls in In re Compton [1945] 1 Ch. 123). The truster may have selected a class of persons which forms an aggregate that is not a section of the community, and if he has done that the trust will fail for perpetuity. All depends on the attribute by which the selection of the class is determined. It is on the difficulty of defining the attribute or qualification which differentiates a section of the public from an aggregate of persons which is not a section of the public that all attempts to define the public element in charitable trusts have foundered. I will confine myself to educational trusts. It is not obvious a priori that a trust for the education of persons having the common qualification that they have already had part of their education at a named school is public. Yet there is no doubt that such trusts are public charitable trusts and arc among the most securely established charitable trusts known to the law. On the other hand, a trust for the education of the descendants of A.B., however numerous they may be, is not a charitable trust (In re Compton [1945] 1 Ch. 123 per the Master of the Rolls at p. 136). These difficulties come from the historical development of the law of charity. I remind your Lordships of the observations of Lord Simonds in Gilmour v. Coats [1949] A.C. 426, that the law of charity has been built up not logically but empirically. It is this empirical development which has so often baffled efforts to reduce the law to systematized definitions. In the present instance this House has for the first time to declare whether a trust for the education of the children of the employees of named employers is a charitable trust. If there had been a long and uniform trend of authority in favour of receiving such a trust as a charity, I apprehend that your Lordships would have been willing to decide the appeal in accord- ance with that trend. But as I shall later show, the authorities are with one exception against the acceptance of trusts of this kind as a charity. 5 If the issue is to be decided on principle and without reference to authority the question is whether a class with the common attribute that the members are the children of the employees of the same employer is a section of the public or merely an aggregate of persons without public significance. The fact that the children of the employees and not the employees themselves are the beneficiaries does not help the Appellant, for there is no public element in the relationship of parent and child. The common attribute that each parent has a contract of service with the same employer remains for consideration. A contract of service is in a high degree personal, and it constitutes a personal and private relationship between the parties. What- ever the number of the employees in the service of the same employer each still stands independently in this personal and private relationship to the employer. For certain purposes they are in relationship to one another, the relation of common employment with the rights and duties which arise from that relationship. These are private rights and duties and have no public element, except the interest that the community has in the harmonious and efficient operation of its industries and commerce and in the securing of good and safe conditions of labour. But that interest is not concerned with the employees of particular employers as such but with employees at large or employees generally in particular occupations and is not an element relevant to this issue. In principle 1 am unable to say that any public element can be born out of the several private contracts between a particular employer and his employees. The Appellant would not boldly submit that when the common employer employed two servants the public element at once emerged. He said it was a question of degree and the Courts must take account of the number of employees, the magnitude of the sum settled by the truster, the size of the employers' undertaking, the non-contractual personal relationships (or their absence) between the employer and his employees, and other circumstances. 1 am unable to find any logical principle in these submissions. If there is no public element to be found in the bare nexus of common employment all attempts to build up the public element out of circumstances which have no necessary relation with it but are adventitious, accidental and variable must be unavail- ing when the truster has chosen to define the selected class solely by the attribute of common employment. I would add that the Appellant's argu- ment would lead to a degree of uncertainty in this branch of the law which only compelling authority or logical necessity would induce me to accept. It may be conceded that the distinction inherent in the view I have taken between an educational trust for the children of all employees in the tobacco industry (see Hall v. Derby Sanitary Authority (1885) 16 Q.B.D. 163) and the present trust may appear to many over-refined and unpractical. But unless it is accepted that all trusts for education are charitable, that is a criticism which cannot be avoided. If a line must be drawn between public trusts and trusts that are not public there will always be marginal cases and the appearance of over-refinement. Of the authorities, In re Drummond [1914) 2 Ch 90 , a case upon the fourth of Lord Macnaghten's classes, is adverse to the Appellant. In re Rayner (1920) 122 L.T. 577 is the only case which supports the Appellant's con- tention. It was assumed rather than decided by the same learned Judge, Eve, J.. who decided In re Drummond, that a bequest to the governors of a commercial company of shares in the company with a direction to apply the income to the education of children of persons who for five years and upwards had been in the employment of the company was a charitable trust. Both these cases were considered in In re Compton (1945) 1 Ch. 123, and In re Drummond was approved and In re Rayner disapproved. I respectfully agree with the comments of Lord Greene the Master of the Rolls, as he then was, on both these cases. In re Hobourn Aero Com- ponents Limited's Air Raid Distress Fund 119461 1 Ch. 194, was also a case on Lord Macnaghten's fourth class. It decided that funds collected by the employees of a company for their own benefit was not a fund applicable for the benefit of the public or any section of the public, because the purpose of the subscription was to benefit the subscribers themselves. But 10962 A3 6 Morton, L.J., as he then was, discussed (at pp. 207-9) the requirement that a purpose in order to be charitable must be directed to the benefit of the community or a section of the community with special relation to trusts for the benefit of employees of a particular company. With all that he said I respectfully agree. I therefore consider that to admit the present trust to the category of charity would be an innovation contrary alike to principle and to the trend of authority and on these grounds I would dismiss the appeal. Lord Oaksey MY LORDS, I have had the advantage of reading the opinion of the noble Lord on the Woolsack and I agree with it. Lord Morton of Henryton my lords. I have had the privilege of reading in print- the opinions which have just been delivered by my noble and learned friends Lord Simonds and Lord Normand. I agree with these opinions but, as 1 was a party to the decisions of the Court of Appeal in In re Campion [19451 1 Ch. 123 and In re Hobourn Aero Components Limited's Air Raid Distress Fund [1946] 1 Ch. 194, it is perhaps appropriate that I should say a few words about these cases and certain other cases. Counsel for the Appellant submitted that the observations of Lord Greene, M.R. (with which 1 concurred) in ihe former case and of myself in the latter case, in regard to trusts for the employees of a particular company, were ill founded. I have reconsidered these observations with great care in the light on the arguments submitted on this appeal, and I see no reason to qualify any of them. In the last portion of his speech my noble and learned friend on the Woolsack referred to the " poor relations" cases, of which perhaps the most notable is Isaac v. de Friez (1754 2 Amb. 595). In In re Compton, supra. Lord Greene, M.R. considered these cases and observed " the cases " must at this date be regarded as good law, although they are, perhaps, " anomalous ". In the course of the argument, your Lordships' attention was called to a line of much more modern decisions which might possibly be described as the descendants of the " poor relations " cases. Recently, in the case of Gibson v. South American Stores (Gath and Chaves) Limited [1950] 1 Ch. 177 the Court of Appeal had to consider the trusts of a fund called " Employees' Health and Relief Fund " established by the defendant company. The Board of the Company had executed a Deed vesting a fund in trustees and declaring (by Clause 3) that it was to be used for grant- ing, at the discretion of the Board, gratuities, pensions or allowances to beneficiaries. By Clause 4 it was declared that the class of beneficiaries included " all persons who, in the opinion of the London Board, are or " shall be necessitous and deserving and who for the time being are or have " been in the company's employ or in the employ of any agents of the com- " pany or in the employ of (a subsidiary company) and the wives, widows, " husbands, widowers, children, parents and other dependants of any person " who for the time being is or would, if living, have been himself or herself " a member of the class of beneficiaries ". The Court of Appeal first held that, as a matter of construction, the trusts established in Clauses 3 and 4 were limited to necessitous beneficiaries. Sir Raymond Evershed, M.R. having stated the above decision continued:
" That 7 " left as the next point for discussion what, it appeared, might well be a ques- " tion of law of great difficulty and of no little importance. The question " may, I think, be put thus: under the law as it has now been established, " and in the light of several recent decisions, both in this court and in the "
House of Lords, is a trust for a class of poor persons defined by reference " to the fact that they are employed by some person, firm or company, a " good charitable trust, or does it fail of that qualification through the absence " of the necessary public element? " If one omits the word " poor " the question thus posed is, in substance, the same as the question which arises on the present appeal. The learned Master of the Rolls then went on to consider the cases of Spiller v. Maude 32 Ch.D. 158, In re Gosling 48 W.R. 300, In re Buck [1896] 2 Ch 727 and In re Sir Robert Laidlaw, an unreported case decided by the Court of Appeal in 1935, and felt constrained by the last men- tioned authority to decide that the trust in Gibson's case was a valid charitable trust, notwithstanding the limited nature of the class of beneficiaries. The element of poverty of the beneficiaries was present in each of the cases considered by the learned Master of the Rolls, and therefore each case fell into the first of the four classes of charitable trusts laid down by Lord Macnaghten in Pemsel's case [18911 A.C. 531 at p. 583, whereas the present case falls into the second class. I think that for this reason your Lordships are of opinion that it is neither necessary nor desirable to express any view, on the present occasion, upon the cases to which I have just referred. I am content to fall in with this opinion, only observing that they may require careful consideration in this House on some future occasion. I agree that the Appeal must be dismissed with costs. Lord MacDermott MY LORDS, It is not disputed that this trust is for the advancement of education. The question is whether it is of a public nature, whether, in the words of Lord Wrenbury in Verge v. Somerville [1924] AC 496 at 499, "it is for the " benefit of the community or of an appreciably important class of the " community ". The relevant class here is that from which those to be educated are to be selected. The Appellant contends that this class is public in character; the Respondent Bank (as personal representative of the last surviving settlor) denies this and says that the class is no more than a group of private individuals. Until comparatively recently the usual way of approaching an issue of this sort, at any rate where educational trusts were concerned, was, I believe, to regard the facts of each case and to treat the matter very much as one of degree. No definition of what constituted a sufficient section of the public for the purpose was applied, for none existed; and the process seems to have been one of reaching a conclusion on a general survey of the circumstances and considerations regarded as relevant rather than of making a single, con- clusive test. The investigation left the course of the dividing line between what was and what was not a section of the community unexplored, and was concluded when it had gone far enough to establish to the satisfaction of the Court whether or not the trust was public; and the decision as to that was, I think, very often reached by determining whether or not the trust was private. Now, if it is still .permissible to conduct the present inquiry on these broad if imprecise lines, I would hold with the Appellant. The numerical strength of the class is considerable on any showing. The employees concerned number over 110,000, and it may reasonably be assumed that the children, who constitute the class in question, are no fewer. The large size of the class is not, of course, decisive but in my view it cannot be left out of account when the problem is approached in this way. Then it must be observed that the propositi are not limited to those presently employed. They include 8 former employees (not reckoned in the figure I have given) and are, there- fore, a more stable category than would otherwise be the case. And, further, the employees concerned are not limited to those in the service of the " British American Tobacco Company Limited or any of its subsidiary or " allied companies "—itself a description of great width—but include the employees, in the event of the British American Tobacco Company being reconstructed or merged on amalgamation, of the reconstructed or amalga- mated company or any of its subsidiary companies. No doubt the settlors here had a special interest in the welfare of the class they described, but, apart from the fact that this may serve to explain the particular form of their bounty, I do not think it material to the question in hand. What is material, as I regard the matter, is that they have chosen to benefit a class which is, in fact, substantial in point of size and importance and have done so in a manner which, to my mind, manifests an intention to advance the interests of the class described as a class rather than as a collection or succes- sion of particular individuals. Proceeding on the basis I have mentioned, I find no difficulty in distinguish- ing this trust from that considered by Eve, J. in In re Drummond [1914] 2 Ch. 90. There the class was narrowly defined by reference to the work- people employed in a particular department in a particular business. I do not question the correctness of the decision that that was a trust for private individuals and therefore not public in the relevant sense. But I do not think there is anything in the judgment of the learned Judge to warrant the view that the conclusion he reached should prevail in all cases where, in the qualifications for admission to the class of beneficiaries, there has somewhere to be found, it may be at one remove or more, the fact of employment by one of a number of designated employers. There is another difference to 'be noted between that case and the present one. Apart from the marked contrast in the scope of the respective trusts, the trust purpose in In re Drummond was not, prima facie, within any of the well-known classes of legal charity. Here it is otherwise, for the trust is plainly one for the advance- ment of education. Had Eve J. been able to hold in In re Drummond that the trust was for the relief of poverty I think it is clear from his subsequent decision in In re Rayner, 122 L.T. 577, that he would have reached a different conclusion. It may be that in this respect the relief of poverty and the (advancement of education do not stand on precisely the same footing. I confess I do not see why in principle there should be such a distinction; but even if there is, it is none the less true to say that in both fields the actual work of the trust advances the public interest in some degree. If, then, the class of potential beneficiaries in an educational trust is substantial, and not obviously private in nature, I think one may reasonably commence, in the kind of investigation I am considering, by assuming, until the contrary appears, that the trust is for the benefit of the community. The Respondent Bank, however, contends that the inquiry should be of quite a different character to that which I have been discussing. It advances as the sole criterion a narrower test derived from the decisions of the Court of Appeal in In re Compton [1945] 1 Ch. 123, and in In re Hobourn Aero Components Limited's Air Raid Distress Fund [1946] 1 Ch. 194. The basis and nature of this test appear from the passage in the judgment of the Court in In re Compton where Lord Greene M.R. says (at p. 129):
" In the case " of many charitable gifts it is possible to identify the individuals who are to " benefit, or who at any given moment constitute the class from which the " beneficiaries are to be selected. This circumstance does not, however, " deprive the gift of its public character. Thus, if there is a gift to relieve the " poor inhabitants of a parish the class to benefit is readily ascertainable. But " they do not enjoy the benefit, when they receive it, by virtue of their " character as individuals but by virtue of their membership of the specified " class. In such a case the common quality which unites the potential " beneficiaries into a class is essentially an impersonal one. It is definable by " reference to what each has in common with the others, and that is something " into which their status as individuals does not enter. Persons claiming to " belong to the class do so not because they are A.B., C.D. and E.F. but 9 " because they are poor inhabitants of the parish. If, in asserting their claim, " it were necessary for them to establish the fact that they were the individuals "
A.B., C.D. and E.F., I cannot help thinking that on principle the gift ought " not to be held to be a charitable gift, since the introduction into their " qualification of a purely personal element would deprive the gift of its " necessary public character. It seems to me that the same principle ought " to apply when the claimants, in order to establish their status, have to assert " and prove, not that they themselves are A.B., C.D. and E.F., but that they " stand in some specified relationship to the individuals A.B., C.D. and E.F., " such as that of children or employees. In such a case, too, a purely personal " element enters into and is an essential part of the qualification, which is " defined by reference to something, i.e. a personal relationship to individuals " or an individual which is in its essence non-public." The test thus propounded focuses upon the common quality which unites those within the class concerned and asks whether that quality is essen- tially impersonal or essentially personal. If the former, the class will rank as a section of the public and the trust will have the element common to and necessary for all legal charities; but, if the latter, the trust will be private and not charitable. It is suggested in the passage just quoted, and made clear beyond doubt in In re Hobourn, that in the opinion of the Court of Appeal employment by a designated employer must be regarded for this purpose as a personal and not as an impersonal bond of union. In this connection and as illustrating the discriminating character of what I may call " the Compton test" reference should be made to that part of the judgment of the learned Master of the Rolls in In re Hobourn in which he speaks of the decision in Hall v. Derby Sanitary Authority (1885) 16 Q.B.D. 163. The passage is to be found on page 206 of the report and runs thus:
" That related to a trust for railway servants. It is said that " if a trust for railway servants can be a good charity, so too a trust for " railway servants in the employment of a particular railway company is " a good charity. That is not so. The reason, 1 think, is that in the one " case the trust is for railway servants in general and in the other case " it is for employees of a particular company, a fact which limits the potential " beneficiaries to a class ascertained on a purely personal basis "
. My Lords, 1 do not quarrel with the result arrived at in the Compton and Hobourn cases, and I do not doubt that the Compton test may often prove of value and lead to a correct determination. But, with the great respect due to those who have formulated this test, I find myself unable to regard it as a criterion of general applicability and conclusiveness. In the first place I see much difficulty in dividing the qualities or attributes, which may serve to bind human beings into classes, into two mutually ex- clusive groups, the one involving individual status and purely personal, the other disregarding such status and quite impersonal. As a task this seems to me no less baffling and elusive than the problem to which it is directed, namely, the determination of what is and what is not a section of the public for the purposes of this branch of the law. After all, what is more personal than poverty or blindness or ignorance? Yet none would deny that a gift for the education of the children of the poor or blind was charitable; and I doubt if there is any less certainty about the charitable nature of a gift for, say, the education of children who satisfy a specified examining body that they need and would benefit by a course of special instruction designed to remedy their educational defects. But can any really funda- mental distinction, as respects the personal or impersonal nature of the common link, be drawn between those employed, for example, by a par- ticular University and those whom the same University has put in a certain category as the result of individual examination and assessment? Again, if the bond between those employed by a particular railway is purely per- sonal, why should the bond between those who are employed as railway men be so essentially different? Is a distinction to be drawn in this respect between those who are employed in a particular industry before it is nationalized and those who are employed therein after that process has been completed and one employer has taken the place of many? Are miners in the service of the National Coal Board now in one category and miners 10 at a particular pit or of a particular district in another? Is the relationship between those in the service of the Crown to be distinguished from that obtaining between those in the service of some other employer? Or, if not, are the children of, say, soldiers or civil servants to be regarded as not constituting a sufficient section of the public to make a trust for their education charitable? It was conceded in the course of the argument that, had the present trust been framed so as to provide for the education of the children of those engaged in the tobacco industry in a named county or town, it would have been a good charitable disposition, and that even thoush the class to be benefited would have been appreciably smaller and no more important than is the class here. That concession follows from what the Court of Appeal has said. But if it is sound and a personal or impersonal relationship remains the universal criterion 1 think it shows, no less than the queries 1 have just raised in indicating some of the diffi- culties of the problem, that the Compton test is a very arbitrary and artificial rule. This leads me to the second difficulty I have regarding it. If I under- stand it aright it necessarily makes the quantum of public benefit a con- sideration of little moment; the size of the class becomes immaterial and the need of its members and the public advantage of having that need met appear alike to be irrelevant. To my mind these are considerations of some account in the sphere of educational trusts for, as already indicated, 1 think the educational value and scope of the work actually to be done must have a bearing on the question of public benefit. Finally, it seems to me that, far from settling the state of the law on this particular subject, the Compton test is more likely to create confusion and doubt in the case of many trusts and institutions of a character whose legal standing as charities has never been in question. I have particularly in mind gifts for the education of certain special classes such, for example, as the daughters of missionaries, the children of those professing a particular faith or accepted as ministers of a particular denomination, or those whose parents have sent them to a particular school for the earlier stages of their training. I cannot but think that in cases of this sort an analysis of the common quality binding the class to be benefited may reveal a relationship no less personal than that existing between an employer and those in his service. Take, for instance, a trust for the provision of university educa- tion for boys coming from a particular school. The common quality binding the members of that class seems to reside in the fact that their parents or guardians all contracted for their schooling with the same establishment or body. That the school in such a case may itself be a charitable founda- tion seems altogether beside the point and quite insufficient to hold the Compton test at bay if it is well founded in law. My Lords, counsel for the Appellant and for the Attorney General adumbrated several other tests for establishing the presence or absence of the necessary public element. I have given these my careful consideration and I do not find them any more sound or satisfactory than the Compton test. I therefore return to what I think was the process followed before the decision in Compton's case and, for the reasons already given, I would hold the present trust charitable and allow the Appeal. I have only to add that I recognise the imperfections and uncertainties of that process. They are as evident as the difficulties of finding something better. But I venture to doubt if it is in the power of the Courts to resolve those diffi- culties satisfactorily as matters stand. It is a long cry to the age of Elizabeth and I think what is needed is a fresh start from a new statute. (10962) Wt. 8109-108 35 12/50 D.L./PA/19 Once more your Lordships have to consider the difficult subject of charit- able trusts, and this time a question is asked to which no wholly satisfactory answer can be given. 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 amalga- mation of the Company such other persons as were therein mentioned, in which event a variation was made also in the beneficiaries under the trust.[2]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.[3]In these circumstances the question arose whether the trust that 1 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 Respon- dent Bank, since in the event of invalidity there is a resulting trust of the trust premises to the estates of the grantors.[4]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 com- panies was large. It exceeded 110,000.[5]This question coming before Roxburgh J. in the Chancery Division, it was conceded and he held that, having regard to the decisions of the Courj of Appeal in In re Compton [19451, 1 Ch. 123 and In re Hobourn Aero Components Limited's Air Raid Distress fund [19461, 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 2[6]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 119491, A.C.. 426, this principle was reasserted. It is easy to state and has been stated in, a4 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. . . ."
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.[8]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 (1 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. 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 former case, In re Compton, Lord Greene M.R. had by way of illustration placed members of a family and employees of a particular employer on the same footing, finding neither in common[9]3 kinship nor in common employment the sort of nexus which is sufficient, My Lords, I am so fully in agreement with what was said by Lord Greene in both cases and by my noble and learned friend, then Lord Justice Morton. in the Hobourn case, that 1 am in danger of repeating without improving upon their words. No one who has been versed for many years in this difficult and very artificial branch of the law can be unaware of its illogicalities, but I join with my noble and learned friend in echoing the observations which he cited from the judgment of Lord Justice Russell in In re Grove-Grady and I agree with him that the decision in In re Drummond " imposed a very healthy check upon the extension of the legal definition " of ' charity ' ". It appears to me that it would be an extension, for which there is no justification in principle or authority, to regard common employ- ment as a quality which constitutes those employed a section of the community. It must not, I think, be forgotten that charitable institutions enjoy rare and increasing privileges, and that the claim to come within that privileged class should be clearly established. With the single exception of In re Rayner 122 L.T. 577, which I must regard as of doubtful authority, no case has been brought to the notice of the House in which such a claim as this has been made, where there is no element of poverty in the beneficiaries, but just this and no more, that they are the children of those in a common employment. Learned counsel for the Appellant sought to fortify his case by pointing to the anomalies that would ensue from the rejection of his argument. For, he said, admittedly those who follow a profession or calling, clergymen, lawyers, colliers, tobacco-workers and so on are a section of the public; how strange then it would be if, as in the case of railwaymen, those who follow a particular calling are all employed by one employer. Would a trust for the education of railwaymen be charitable, but a trust for the education of men employed on the railways by the Transport Board not be charitable? And what of service of the Crown whether in the civil service or the armed forces? Is there a difference between soldiers and soldiers of the King? My Lords, I am not impressed by this sort of argument and will consider on its merits, if the occasion should arise, the case where the description of the occupation and the employment is in effect the same, where in a word, if you know what a man does, you know who employs him to do it. It is to me a far more cogent argument, as it was to my noble and learned friend in the Hobourn case, that if a section of the public is con- stituted by the personal relation of employment, it is impossible to say that it is not constituted by 1,000 as by 100,000 employees, and, if by 1,000, then by 100. and, if by 100, then by 10. I do not mean merely that there is a difficulty in drawing the line, though that too is significant: I have it also in mind that, though the actual number of employees at any one moment might be small, it might increase to any extent, just as, being large, it might decrease to any extent. If the number of employees is the test of validity, must the Court take into account potential increase or decrease, and. if so, as at what date? I would end, my Lords, where I began, by saying that I concur in the reasoning of the Court of Appeal in the Hobourn case, but there are cer- tain points in the argument for the Appellant about which I should say a few words. It was urged by counsel for the Attorney-General, who was allowed to address the House, that there was here a valid charitable trust created, since there was no private person who could sue to enforce the trust. I am not persuaded that this would be so, if the trust were otherwise enforceable. But in any case the test is not a valid one. If this trust is charitable, the Attorney-General can sue to enforce it: it does not follow that it is charitable because no one else can sue to enforce it. I would also, as I have previously indicated, say a word about the so-called " poor relations " cases. I do so only because they have once more been brought forward as an argument in favour of a more generous view of what may be charitable. It would not be right for me to affirm or to denounce or to justify these decisions: I am concerned only to say that the law of charity, so far as it relates to " the relief of aged, impotent and " poor people " (I quote from the statute) and to poverty in general, has followed its own line. ,and that it is not useful to try to harmonise decisions 4 on that branch of the law with the broad proposition upon which the deter- mination of this case must rest. It is not for me to say what fate might await those cases if in a poverty case this House had to consider them; But, as was observed by Lord Wright in Admiralty Commissioners v. Valverda [1938], A.C. 173 at 194, while " this House has no doubt power to " over-rule even a long established course of decisions of the Courts, provided " it has not itself determined the question ", yet " in general this House "will adopt this course only in plain cases where serious inconvenience " or injustice would follow from perpetuating an erroneous construction or " ruling of law ". I quote with respect those observations to indicate how unwise it would be to cast any doubt upon decisions of respectable anti- quity in order to introduce a greater harmony into the law of charity as a whole.[10]The appeal should in my opinion be dismissed with costs. Lord Normand my lords. The trust is an educational trust and it therefore satisfies one of the conditions for acceptance as a charitable trust. But there is another con- dition which must also be satisfied, that it is a trust beneficial to the community or to a section of the community.[11]No general rule has yet been formulated by which to distinguish trusts which have this essential element of public benefit and those which have not, and the valiant attempts of Counsel to arrive at a rule have failed to convince me. I am, however, satisfied that the element of public benefit must be found in the definition of the class of persons selected by the truster as the objects of his bounty. That seems to me to follow from the principle that the trust purpose must be directed to the benefit of the community or a section of the community. (Tudor on Charities 5th Edn. p. 11, approved by the Master of the Rolls in In re Compton [1945] 1 Ch. 123). The truster may have selected a class of persons which forms an aggregate that is not a section of the community, and if he has done that the trust will fail for perpetuity. All depends on the attribute by which the selection of the class is determined. It is on the difficulty of defining the attribute or qualification which differentiates a section of the public from an aggregate of persons which is not a section of the public that all attempts to define the public element in charitable trusts have foundered. I will confine myself to educational trusts. It is not obvious a priori that a trust for the education of persons having the common qualification that they have already had part of their education at a named school is public. Yet there is no doubt that such trusts are public charitable trusts and arc among the most securely established charitable trusts known to the law. On the other hand, a trust for the education of the descendants of A.B., however numerous they may be, is not a charitable trust (In re Compton [1945] 1 Ch. 123 per the Master of the Rolls at p. 136). These difficulties come from the historical development of the law of charity. I remind your Lordships of the observations of Lord Simonds in Gilmour v. Coats [1949] A.C. 426, that the law of charity has been built up not logically but empirically. It is this empirical development which has so often baffled efforts to reduce the law to systematized definitions.[12]In the present instance this House has for the first time to declare whether a trust for the education of the children of the employees of named employers is a charitable trust. If there had been a long and uniform trend of authority in favour of receiving such a trust as a charity, I apprehend that your Lordships would have been willing to decide the appeal in accord- ance with that trend. But as I shall later show, the authorities are with one exception against the acceptance of trusts of this kind as a charity. 5[13]If the issue is to be decided on principle and without reference to authority the question is whether a class with the common attribute that the members are the children of the employees of the same employer is a section of the public or merely an aggregate of persons without public significance. The fact that the children of the employees and not the employees themselves are the beneficiaries does not help the Appellant, for there is no public element in the relationship of parent and child. The common attribute that each parent has a contract of service with the same employer remains for consideration. A contract of service is in a high degree personal, and it constitutes a personal and private relationship between the parties. What- ever the number of the employees in the service of the same employer each still stands independently in this personal and private relationship to the employer. For certain purposes they are in relationship to one another, the relation of common employment with the rights and duties which arise from that relationship. These are private rights and duties and have no public element, except the interest that the community has in the harmonious and efficient operation of its industries and commerce and in the securing of good and safe conditions of labour. But that interest is not concerned with the employees of particular employers as such but with employees at large or employees generally in particular occupations and is not an element relevant to this issue. In principle 1 am unable to say that any public element can be born out of the several private contracts between a particular employer and his employees. The Appellant would not boldly submit that when the common employer employed two servants the public element at once emerged. He said it was a question of degree and the Courts must take account of the number of employees, the magnitude of the sum settled by the truster, the size of the employers' undertaking, the non-contractual personal relationships (or their absence) between the employer and his employees, and other circumstances. 1 am unable to find any logical principle in these submissions. If there is no public element to be found in the bare nexus of common employment all attempts to build up the public element out of circumstances which have no necessary relation with it but are adventitious, accidental and variable must be unavail- ing when the truster has chosen to define the selected class solely by the attribute of common employment. I would add that the Appellant's argu- ment would lead to a degree of uncertainty in this branch of the law which only compelling authority or logical necessity would induce me to accept.[14]It may be conceded that the distinction inherent in the view I have taken between an educational trust for the children of all employees in the tobacco industry (see Hall v. Derby Sanitary Authority (1885) 16 Q.B.D. 163) and the present trust may appear to many over-refined and unpractical. But unless it is accepted that all trusts for education are charitable, that is a criticism which cannot be avoided. If a line must be drawn between public trusts and trusts that are not public there will always be marginal cases and the appearance of over-refinement.[15]Of the authorities, In re Drummond [1914) 2 Ch 90 , a case upon the fourth of Lord Macnaghten's classes, is adverse to the Appellant. In re Rayner (1920) 122 L.T. 577 is the only case which supports the Appellant's con- tention. It was assumed rather than decided by the same learned Judge, Eve, J.. who decided In re Drummond, that a bequest to the governors of a commercial company of shares in the company with a direction to apply the income to the education of children of persons who for five years and upwards had been in the employment of the company was a charitable trust. Both these cases were considered in In re Compton (1945) 1 Ch. 123, and In re Drummond was approved and In re Rayner disapproved. I respectfully agree with the comments of Lord Greene the Master of the Rolls, as he then was, on both these cases. In re Hobourn Aero Com- ponents Limited's Air Raid Distress Fund 119461 1 Ch. 194, was also a case on Lord Macnaghten's fourth class. It decided that funds collected by the employees of a company for their own benefit was not a fund applicable for the benefit of the public or any section of the public, because the purpose of the subscription was to benefit the subscribers themselves. But 10962 A3 6[17]Morton, L.J., as he then was, discussed (at pp. 207-9) the requirement that a purpose in order to be charitable must be directed to the benefit of the community or a section of the community with special relation to trusts for the benefit of employees of a particular company. With all that he said I respectfully agree. I therefore consider that to admit the present trust to the category of charity would be an innovation contrary alike to principle and to the trend of authority and on these grounds I would dismiss the appeal. Lord Oaksey MY LORDS, I have had the advantage of reading the opinion of the noble Lord on the Woolsack and I agree with it. Lord Morton of Henryton my lords. I have had the privilege of reading in print- the opinions which have just been delivered by my noble and learned friends Lord Simonds and Lord Normand. I agree with these opinions but, as 1 was a party to the decisions of the Court of Appeal in In re Campion [19451 1 Ch. 123 and In re Hobourn Aero Components Limited's Air Raid Distress Fund [1946] 1 Ch. 194, it is perhaps appropriate that I should say a few words about these cases and certain other cases.[18]Counsel for the Appellant submitted that the observations of Lord Greene, M.R. (with which 1 concurred) in ihe former case and of myself in the latter case, in regard to trusts for the employees of a particular company, were ill founded. I have reconsidered these observations with great care in the light on the arguments submitted on this appeal, and I see no reason to qualify any of them. In the last portion of his speech my noble and learned friend on the Woolsack referred to the " poor relations" cases, of which perhaps the most notable is Isaac v. de Friez (1754 2 Amb. 595). In In re Compton, supra. Lord Greene, M.R. considered these cases and observed " the cases " must at this date be regarded as good law, although they are, perhaps, " anomalous ". In the course of the argument, your Lordships' attention was called to a line of much more modern decisions which might possibly be described as the descendants of the " poor relations " cases. Recently, in the case of Gibson v. South American Stores (Gath and Chaves) Limited [1950] 1 Ch. 177 the Court of Appeal had to consider the trusts of a fund called " Employees' Health and Relief Fund " established by the defendant company. The Board of the Company had executed a Deed vesting a fund in trustees and declaring (by Clause 3) that it was to be used for grant- ing, at the discretion of the Board, gratuities, pensions or allowances to beneficiaries. By Clause 4 it was declared that the class of beneficiaries included " all persons who, in the opinion of the London Board, are or " shall be necessitous and deserving and who for the time being are or have " been in the company's employ or in the employ of any agents of the com- " pany or in the employ of (a subsidiary company) and the wives, widows, " husbands, widowers, children, parents and other dependants of any person " who for the time being is or would, if living, have been himself or herself " a member of the class of beneficiaries ".[19]The Court of Appeal first held that, as a matter of construction, the trusts established in Clauses 3 and 4 were limited to necessitous beneficiaries. Sir Raymond Evershed, M.R. having stated the above decision continued: " That[20]7 " left as the next point for discussion what, it appeared, might well be a ques- " tion of law of great difficulty and of no little importance. The question " may, I think, be put thus: under the law as it has now been established, " and in the light of several recent decisions, both in this court and in the " House of Lords, is a trust for a class of poor persons defined by reference " to the fact that they are employed by some person, firm or company, a " good charitable trust, or does it fail of that qualification through the absence " of the necessary public element? " If one omits the word " poor " the question thus posed is, in substance, the same as the question which arises on the present appeal. The learned Master of the Rolls then went on to consider the cases of Spiller v. Maude 32 Ch.D. 158, In re Gosling 48 W.R. 300, In re Buck [1896] 2 Ch 727 and In re Sir Robert Laidlaw, an unreported case decided by the Court of Appeal in 1935, and felt constrained by the last men- tioned authority to decide that the trust in Gibson's case was a valid charitable trust, notwithstanding the limited nature of the class of beneficiaries.[21]The element of poverty of the beneficiaries was present in each of the cases considered by the learned Master of the Rolls, and therefore each case fell into the first of the four classes of charitable trusts laid down by Lord Macnaghten in Pemsel's case [18911 A.C. 531 at p. 583, whereas the present case falls into the second class. I think that for this reason your Lordships are of opinion that it is neither necessary nor desirable to express any view, on the present occasion, upon the cases to which I have just referred. I am content to fall in with this opinion, only observing that they may require careful consideration in this House on some future occasion. I agree that the Appeal must be dismissed with costs. Lord MacDermott MY LORDS, It is not disputed that this trust is for the advancement of education. The question is whether it is of a public nature, whether, in the words of Lord Wrenbury in Verge v. Somerville [1924] AC 496 at 499, "it is for the " benefit of the community or of an appreciably important class of the " community ". The relevant class here is that from which those to be educated are to be selected. The Appellant contends that this class is public in character; the Respondent Bank (as personal representative of the last surviving settlor) denies this and says that the class is no more than a group of private individuals.[23]Until comparatively recently the usual way of approaching an issue of this sort, at any rate where educational trusts were concerned, was, I believe, to regard the facts of each case and to treat the matter very much as one of degree. No definition of what constituted a sufficient section of the public for the purpose was applied, for none existed; and the process seems to have been one of reaching a conclusion on a general survey of the circumstances and considerations regarded as relevant rather than of making a single, con- clusive test. The investigation left the course of the dividing line between what was and what was not a section of the community unexplored, and was concluded when it had gone far enough to establish to the satisfaction of the Court whether or not the trust was public; and the decision as to that was, I think, very often reached by determining whether or not the trust was private. Now, if it is still .permissible to conduct the present inquiry on these broad if imprecise lines, I would hold with the Appellant. The numerical strength of the class is considerable on any showing. The employees concerned number over 110,000, and it may reasonably be assumed that the children, who constitute the class in question, are no fewer. The large size of the class is not, of course, decisive but in my view it cannot be left out of account when the problem is approached in this way. Then it must be observed that the propositi are not limited to those presently employed. They include 8 former employees (not reckoned in the figure I have given) and are, there- fore, a more stable category than would otherwise be the case. And, further, the employees concerned are not limited to those in the service of the " British American Tobacco Company Limited or any of its subsidiary or " allied companies "—itself a description of great width—but include the employees, in the event of the British American Tobacco Company being reconstructed or merged on amalgamation, of the reconstructed or amalga- mated company or any of its subsidiary companies. No doubt the settlors here had a special interest in the welfare of the class they described, but, apart from the fact that this may serve to explain the particular form of their bounty, I do not think it material to the question in hand. What is material, as I regard the matter, is that they have chosen to benefit a class which is, in fact, substantial in point of size and importance and have done so in a manner which, to my mind, manifests an intention to advance the interests of the class described as a class rather than as a collection or succes- sion of particular individuals.[24]Proceeding on the basis I have mentioned, I find no difficulty in distinguish- ing this trust from that considered by Eve, J. in In re Drummond [1914] 2 Ch. 90. There the class was narrowly defined by reference to the work- people employed in a particular department in a particular business. I do not question the correctness of the decision that that was a trust for private individuals and therefore not public in the relevant sense. But I do not think there is anything in the judgment of the learned Judge to warrant the view that the conclusion he reached should prevail in all cases where, in the qualifications for admission to the class of beneficiaries, there has somewhere to be found, it may be at one remove or more, the fact of employment by one of a number of designated employers. There is another difference to 'be noted between that case and the present one. Apart from the marked contrast in the scope of the respective trusts, the trust purpose in In re Drummond was not, prima facie, within any of the well-known classes of legal charity. Here it is otherwise, for the trust is plainly one for the advance- ment of education. Had Eve J. been able to hold in In re Drummond that the trust was for the relief of poverty I think it is clear from his subsequent decision in In re Rayner, 122 L.T. 577, that he would have reached a different conclusion. It may be that in this respect the relief of poverty and the (advancement of education do not stand on precisely the same footing. I confess I do not see why in principle there should be such a distinction; but even if there is, it is none the less true to say that in both fields the actual work of the trust advances the public interest in some degree. If, then, the class of potential beneficiaries in an educational trust is substantial, and not obviously private in nature, I think one may reasonably commence, in the kind of investigation I am considering, by assuming, until the contrary appears, that the trust is for the benefit of the community.[25]The Respondent Bank, however, contends that the inquiry should be of quite a different character to that which I have been discussing. It advances as the sole criterion a narrower test derived from the decisions of the Court of Appeal in In re Compton [1945] 1 Ch. 123, and in In re Hobourn Aero Components Limited's Air Raid Distress Fund [1946] 1 Ch. 194. The basis and nature of this test appear from the passage in the judgment of the Court in In re Compton where Lord Greene M.R. says (at p. 129):
" In the case " of many charitable gifts it is possible to identify the individuals who are to " benefit, or who at any given moment constitute the class from which the " beneficiaries are to be selected. This circumstance does not, however, " deprive the gift of its public character. Thus, if there is a gift to relieve the " poor inhabitants of a parish the class to benefit is readily ascertainable. But " they do not enjoy the benefit, when they receive it, by virtue of their " character as individuals but by virtue of their membership of the specified " class. In such a case the common quality which unites the potential " beneficiaries into a class is essentially an impersonal one. It is definable by " reference to what each has in common with the others, and that is something " into which their status as individuals does not enter. Persons claiming to " belong to the class do so not because they are A.B., C.D. and E.F. but 9 " because they are poor inhabitants of the parish. If, in asserting their claim, " it were necessary for them to establish the fact that they were the individuals "
A.B., C.D. and E.F., I cannot help thinking that on principle the gift ought " not to be held to be a charitable gift, since the introduction into their " qualification of a purely personal element would deprive the gift of its " necessary public character. It seems to me that the same principle ought " to apply when the claimants, in order to establish their status, have to assert " and prove, not that they themselves are A.B., C.D. and E.F., but that they " stand in some specified relationship to the individuals A.B., C.D. and E.F., " such as that of children or employees. In such a case, too, a purely personal " element enters into and is an essential part of the qualification, which is " defined by reference to something, i.e. a personal relationship to individuals " or an individual which is in its essence non-public."[26]The test thus propounded focuses upon the common quality which unites those within the class concerned and asks whether that quality is essen- tially impersonal or essentially personal. If the former, the class will rank as a section of the public and the trust will have the element common to and necessary for all legal charities; but, if the latter, the trust will be private and not charitable. It is suggested in the passage just quoted, and made clear beyond doubt in In re Hobourn, that in the opinion of the Court of Appeal employment by a designated employer must be regarded for this purpose as a personal and not as an impersonal bond of union. In this connection and as illustrating the discriminating character of what I may call " the Compton test" reference should be made to that part of the judgment of the learned Master of the Rolls in In re Hobourn in which he speaks of the decision in Hall v. Derby Sanitary Authority (1885) 16 Q.B.D. 163. The passage is to be found on page 206 of the report and runs thus: " That related to a trust for railway servants. It is said that " if a trust for railway servants can be a good charity, so too a trust for " railway servants in the employment of a particular railway company is " a good charity. That is not so. The reason, 1 think, is that in the one " case the trust is for railway servants in general and in the other case " it is for employees of a particular company, a fact which limits the potential " beneficiaries to a class ascertained on a purely personal basis ".[27]My Lords,[27]1 do not quarrel with the result arrived at in the Compton and Hobourn cases, and I do not doubt that the Compton test may often prove of value and lead to a correct determination. But, with the great respect due to those who have formulated this test, I find myself unable to regard it as a criterion of general applicability and conclusiveness. In the first place I see much difficulty in dividing the qualities or attributes, which may serve to bind human beings into classes, into two mutually ex- clusive groups, the one involving individual status and purely personal, the other disregarding such status and quite impersonal. As a task this seems to me no less baffling and elusive than the problem to which it is directed, namely, the determination of what is and what is not a section of the public for the purposes of this branch of the law. After all, what is more personal than poverty or blindness or ignorance? Yet none would deny that a gift for the education of the children of the poor or blind was charitable; and I doubt if there is any less certainty about the charitable nature of a gift for, say, the education of children who satisfy a specified examining body that they need and would benefit by a course of special instruction designed to remedy their educational defects. But can any really funda- mental distinction, as respects the personal or impersonal nature of the common link, be drawn between those employed, for example, by a par- ticular University and those whom the same University has put in a certain category as the result of individual examination and assessment? Again, if the bond between those employed by a particular railway is purely per- sonal, why should the bond between those who are employed as railway men be so essentially different? Is a distinction to be drawn in this respect between those who are employed in a particular industry before it is nationalized and those who are employed therein after that process has been completed and one employer has taken the place of many? Are miners in the service of the National Coal Board now in one category and miners 10 at a particular pit or of a particular district in another? Is the relationship between those in the service of the Crown to be distinguished from that obtaining between those in the service of some other employer? Or, if not, are the children of, say, soldiers or civil servants to be regarded as not constituting a sufficient section of the public to make a trust for their education charitable? It was conceded in the course of the argument that, had the present trust been framed so as to provide for the education of the children of those engaged in the tobacco industry in a named county or town, it would have been a good charitable disposition, and that even thoush the class to be benefited would have been appreciably smaller and no more important than is the class here. That concession follows from what the Court of Appeal has said. But if it is sound and a personal or impersonal relationship remains the universal criterion 1 think it shows, no less than the queries 1 have just raised in indicating some of the diffi- culties of the problem, that the Compton test is a very arbitrary and artificial rule. This leads me to the second difficulty I have regarding it. If I under- stand it aright it necessarily makes the quantum of public benefit a con- sideration of little moment; the size of the class becomes immaterial and the need of its members and the public advantage of having that need met appear alike to be irrelevant. To my mind these are considerations of some account in the sphere of educational trusts for, as already indicated, 1 think the educational value and scope of the work actually to be done must have a bearing on the question of public benefit.[28]Finally, it seems to me that, far from settling the state of the law on this particular subject, the Compton test is more likely to create confusion and doubt in the case of many trusts and institutions of a character whose legal standing as charities has never been in question. I have particularly in mind gifts for the education of certain special classes such, for example, as the daughters of missionaries, the children of those professing a particular faith or accepted as ministers of a particular denomination, or those whose parents have sent them to a particular school for the earlier stages of their training. I cannot but think that in cases of this sort an analysis of the common quality binding the class to be benefited may reveal a relationship no less personal than that existing between an employer and those in his service. Take, for instance, a trust for the provision of university educa- tion for boys coming from a particular school. The common quality binding the members of that class seems to reside in the fact that their parents or guardians all contracted for their schooling with the same establishment or body. That the school in such a case may itself be a charitable founda- tion seems altogether beside the point and quite insufficient to hold the Compton test at bay if it is well founded in law.[29]My Lords,[29]counsel for the Appellant and for the Attorney General adumbrated several other tests for establishing the presence or absence of the necessary public element. I have given these my careful consideration and I do not find them any more sound or satisfactory than the Compton test. I therefore return to what I think was the process followed before the decision in Compton's case and, for the reasons already given, I would hold the present trust charitable and allow the Appeal. I have only to add that I recognise the imperfections and uncertainties of that process. They are as evident as the difficulties of finding something better. But I venture to doubt if it is in the power of the Courts to resolve those diffi- culties satisfactorily as matters stand. It is a long cry to the age of Elizabeth and I think what is needed is a fresh start from a new statute. (10962) Wt. 8109-108 35 12/50 D.L./PA/19