In re Cox / Baker v. National Trust

In re Cox / Baker v. National Trust
Collection
Supreme Court Judgments
Date
1952-12-22
Report
[1953] 1 SCR 94
Judges
Cartwright, John Robert; Rand, Ivan Cleveland; Kerwin, Patrick; Taschereau, Robert; Fauteux, Joseph Honoré Gérald; Estey, James Wilfred; Kellock, Roy Lindsay
On appeal from
Ontario
Subjects
Trust
Decision Content
Supreme Court of Canada
In re Cox / Baker v. National Trust, 1953 1 S.C.R. 94
Date: 1952-12-22
In re Herbert Coplin Cox
and
In re Louise Bogart Cox
Edwin G. Baker (Plaintiff) Appellant;
and
National Trust Company Limited and Others (Defendants) Respondents.
1952: May 12, 13, 14; 1952: December 22.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Charity—Charitable Trust—Income of trust fund payable to such employees and their dependents of an assurance company as determined by its Board of Directors—Validity.
By his will the testator directed his trustees to hold the residue of his estate upon trust as follows: “To pay the income thereof in perpetuity for charitable purposes only: the persons to benefit directly in pursuance of such charitable purposes are to be only such as shall be or shall have been employees of The Canada Life Assurance Company; subject to the foregoing restrictions, the application of such income, including the amounts to be expended and the persons to benefit therefrom, shall be determined by the Board of Directors of the said The Canada Life Assurance Company, as they, the said Board of Directors, in their absolute discretion shall from time to time decide.” Held: (Rand and Cartwright JJ. dissenting)—That on its true construction the clause did not evidence a general charitable intent and the specific bequest to the employees did not satisfy the test of public benefit requisite to establish it as a charitable trust. Oppenheim v. Tobacco Securities Trust Co. Ld. [1951] A.C. 297; In re Compton [1945] Ch. 123; In re Hobourn Aero Components Ld.’s Air Raid Distress Fund [1946] Ch. 194 and In re Drummond [1942] 2 Ch. 90.
Per: Rand and Cartwright JJ. (dissenting)—The residuary clause declares a general charitable intent and impresses upon the residue a trust for that purpose. The word “directly” restricts direct benefits to those mentioned and implies that all other benefits are to be indirect, but since the benefit to the specified class violates the rules laid down requiring that public quality in the recipients defined by the cases mentioned, it follows that only by indirect benefits to individuals as by grants to charitable agencies or objects are the funds to be dealt with by the trustees.
Rand J. was of opinion that failure of the benefits to the employees of the Assurance Company did not cause the appointment of the Board of Directors as the body to determine the distribution of the funds to also fail but rather that the absolute discretionary appropriation to charity of the property generally was conferred upon the Board.
Cartwright J. was of opinion that since the mode of carrying the testator’s general charitable intention into effect could not be carried out, the matter should be referred back so that proper proceedings could be taken for the propounding and settlement of a scheme for the application cy-près of the residuary estate.
APPEALS by the representative of the employees of The Canada Life Assurance Co. from the judgment of the Court of Appeal for Ontario[1] construing the residuary clause in the wills of the late Herbert Coplin Cox and his widow the late Louise Bogart Cox. The clauses were substantially identical and by consent of the parties the two appeals were heard together. Wells J., the trial judge, construed the disposition as a valid charitable bequest for the relief of poverty confined to the class described[2]. The Court of Appeal reversed his judgment, declared the clause did not constitute a valid charitable bequest and ordered a reference to determine the next-of-kin. J.J. Robinette, Q.C. and G.F. Hayden for Edwin G. Baker, by order representative of the employees of The Canada Life Assurance Co., appellant.
L.H. Snider, Q.C. for the Public Trustee.
Beverley Mathews, Q.C. and W.C. Terry, Q.C. for the National Trust Co., Administrator of the estate of H.C. Cox, respondent.
Hon. S.A. Hayden, Q.C. for the National Trust Co., executor of the will of Louise Bogart Cox.
J.D. Arnup, Q.C. and R.B. Robinson for Margaret Jane Ardagh and all next-of-kin in the same interest, respondent.
H.C. Walker Q.C. for Lida Louise Shepard, respondent.
H.J. McLaughlin, Q.C. for W.B. Shepard, one of the next-of-kin of Louise Bogart Cox, respondent.
P.D. Wilson, Q.C. for the Official Guardian, respondent.
The judgment of Kerwin and Taschereau, JJ. was delivered by:—
KERWIN J.:—The will of the late Herbert Coplin Cox directe his trustees to hold the residue of his estate upon trust as follows:—
To pay the income thereof in perpetuity for charitable purposes only; the persons to benefit directly in pursuance of such charitable purposes are to be only such as shall be or shall have been employees of The Canada Life Assurance Company and/or the dependents of such employees of said The Canada Life Assurance Company; subject to the foregoing restrictions, the application of such income, including the amounts to be expended and the persons to benefit therefrom, shall be determined by the Board of Directors of the said The Canada Life Assurance Company, as they, the said Board of Directors, in their absolute discretion shall from time to time decide. The Trust Fund is to be known as “The Cox Foundation” in memory of the family whose name has been so long associated with the said Company.
The first point to be determined is the proper construction of this clause. If it consisted merely of the opening words “To pay the income thereof in perpetuity for charitable purposes only” that would be a good charitable trust, and it is therefore argued that while in the latter part of the clause the only persons to benefit “directly” from the application of the income are the present and former employees (and their dependants) of The Canada Life Assurance Company, there is an area of indirect benefit untouched by such latter part but which falls within the opening words. As against this it might be suggested that, if that were so and assuming the latter direction would not fall within the scope of legal charity, the funds could be applied for either purpose. It might be also suggested that, in that event, the present case could not be distinguished from those where the fund could be diverted in the trustees’ discretion to an object totally uncharitable in the legal sense with the result that the whole bequest would be void: Hunter v. A.G.[3]; Chichester Diocesan Fund and Board of Finance v. Simpson[4].
The point need not be determined on this appeal because the word “directly” does not operate in the manner suggested as I construe the clause to mean that the charitable purposes for which the income is to be paid in perpetuity are the employees and dependants. Members of that class must of necessity benefit directly as a trust for indirect benefits would be too vague for the Court to enforce. The word “directly” therefore adds nothing. On that construction it is not a case of there being a charitable intention with merely the particular mode of application failing for illegality or some other reason, and the cases cited on that branch of the matter have no application.
Upon a consideration of the numerous decisions, it is clear that, if the objects of a trust are not charitable in themselves, it is not a charitable trust, and the fact that the donor thought his gift charitable is not relevant to the issue: Tudor on Charities, 5th edition, page 8. The circumstance, therefore, that the testator directed his trustees to pay the income for charitable purposes only does not determine the matter when, as I believe, the only purposes to which the moneys may be applied are not charitable. It has now been settled that the element of public benefit is essential for all charities no matter in which of Lord Macnaghten’s classifications in Income Tax Commissioners v. Pemsell[5], they fall. The only exception is the anomalous case of trusts for the relief of poverty and, here, that condition does not exist. Mr. Robinette contended that, granted the words “to pay the income thereof in perpetuity for charitable purposes only” would, by themselves, establish a valid charitable trust, it should be held that the succeeding part of the clause applied only to indigent or necessitous persons. However, this succeeding part permits the Board of Directors to choose employees and dependants who are not poor and the argument fails.
As pointed out by Lord Simonds in Oppenheim v. Tobacco Securities Trust Co. Ld.[6], when the trust is for the benefit of a class of persons, the question is whether that class can be regarded as such a “section of the community” as to satisfy the test of public benefit. He points out that these words, “section of the community”, have no special sanctity, “but they conveniently indicate first, that the possible (I emphasize 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 re Compton[7], 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.”
The House of Lords approved the judgments of Lord Greene as Master of the Rolls in In re Compton7, and of Lord Greene and of Lord Justice Morton (as he then was) in In re Hobourn Aero Components Ltd.’s Air-raid Distress Fund[8]. The decision in In re Drummond[9] was also approved. That decided that trusts for the benefit of employees past, present or future of an employer are not public charities. In re Rayner[10], was regarded as of doubtful authority. As pointed out by Lord Morton of Henryton, the Court of Appeal in Gibson v. South American Stores (Gath and Chaves) Ld.[11], felt obliged because of the rule of stare decisis to follow an unreported decision of its own in 1935, In re Sir Robert Laidlaw, and to hold that a trust was valid which was for all persons who in the opinion of a Board of Directors are, or should be necessitous and deserving, and who had been in the employ of the Company or a subsidiary thereof, and dependants thereof. The element of poverty was present and it was held to be a valid charitable trust notwithstanding the limited nature of the class of beneficiaries. I have already pointed out that the element of poverty does not enter into the present matter and, in my opinion, the decision in Oppenheim is decisive.
It is decisive notwithstanding that at the date of the application to Wells J. the persons who would answer the description of employees, past or present, of the Company, and dependants of such employees, were estimated to be in excess of thirty thousand, and that some of these were in such circumstances as to require financial aid. Even if those facts satisfied the first test of a “section of the community”, the second requirement is a quality which does not depend on the relationship of the members thereof to a particular individual. When the Hobourn case came before the Court of Appeal, it was contended that the observations of that Court in Compton that a trust for the benefit of employees of a business was a purely private and personal trust were dicta only. At page 200, Lord Greene stated his belief in the correctness of those observations, and at page 208, Lord Justice Morton said quite plainly that he entirely approved of the Drummond decision. In the Hobourn case the Court was not dealing with a fund put up by outside persons but, at page 200, Lord Greene stated that “even if we were, I should on the authority of In re Compton feel constrained to hold that such a fund would not be a good charity.” Lord Justice Morton was of the same opinion and Lord Justice Somervell agreed. In view of the approval by the House of Lords of the decisions in Compton and Hobourn, the matter would appear to be concluded.
It was argued that the law should not be the same for Ontario but even if the decision in Oppenheim had never been given, I would hold that its basis, as found in the judgments of Lord Greene in Compton and of Lord Greene and of Lord Justice Morton in Hobourn, is a complete and satisfactory method of disposing of the present issue. I adopt, if I may, the words of Lord Simonds in Oppenheim: “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.” Those privileges, it might be added, are, of course, not confined to the receipt of benefits in perpetuity under a will.
The appeal should be dismissed subject to a variation to which Mr. Snider drew our attention. The testator’s widow survived her husband, and paragraph 5 of the judgment of Wells J., as inserted in the Court of Appeal order, should be stricken out and the following substituted therefor:—
5. And there therefore being an intestacy as to such balance of the testator’s residuary estate, THIS COURT DOTH FURTHER ORDER that it be referred to the Master of this Court at Toronto to determine and report who were entitled thereto at the date of the death of the testator.
The costs of all parties should be paid out of the estate, those of the surviving administrator with the will annexed and trustee of the testator’s will and codicil as between solicitor and client.
The residuary clause in the will of the testator’s widow is the same as in her husband’s and the same order should, therefore, go in the appeal in connection with her estate except that there is no necessity of any alteration in the order of the Court of Appeal. RAND J. (dissenting):—I agree with the construction placed on the residuary clause by my brother Cartwright, that it declares a general charitable intent and impresses upon the residue a trust for that purpose; I agree, also, that the word “directly” is significant, that it restricts direct benefits to those mentioned and implies that all other benefits are to be indirect; I agree, finally, that the benefit to the specified class violates the rules laid down requiring that public quality in the recipients defined by the cases mentioned. It follows that only by indirect benefits to individuals, as by grants to charitable agencies or objects such as libraries, hospitals, schools, churches, works or institutions, are the funds to be dealt with by the Trustees.But I am unable to concur in the view that by reason of the failure of the benefits to the employees of the Assurance Company, the appointment of the Board of Directors as the body to determine the distribution of the funds, must be taken also to fail. The absolute discretionary appropriation to charity of the property generally was conferred upon the Board; benefits might or might not be awarded to the employee group: they might from time to time be bestowed exclusively on other objects. The reasons leading the testator to select the Board would, from the evidence, seem to be obvious. He, himself, as well as others of the Cox family, had long been associated with the Company, and he had come to know and, undoubtedly, appreciate the competency and character of those who constituted its Board. It may be also that that long family connection had, directly or indirectly, in some degree, enabled the accumulation of the wealth of which he was disposing, and it was an easy step to associating the Company with its distribution as a public benefaction.
In these circumstances I cannot take the designation of the Board to have been bound up with the intended benefits, to the employees. The discretion extended over the whole charitable field; and I find nothing to indicate that had there not been the special provision for the employees, that discretion would have been placed elsewhere. I should think, on the contrary, that, in his opinion, the perpetuation of the family name in the maintenance of a charitable Foundation would be uniquely served by such an intimate office on the part of the Board. I would therefore declare the bequest in both testaments to be a valid gift to charity, the income to be applied by the trustees to such charitable purposes with indirect personal benefits only as the Board in their discretion think proper.
The costs of all parties should be paid out of the estates as proposed.
The judgment of Taschereau, Kellock and Fauteux, JJ. was delivered by:—
KELLOCK J.:—As the question arising in these appeals is common to both, it will be convenient to deal with the will of the male deceased. The relevant paragraph reads as follows: (As to which see page 96).
Wells J., the judge of first instance, construed this disposition as a good charitable bequest confined to the relief of poverty among the class described. The Court of Appeal appears to have entertained the same view with respect to the question of construction, but reversed the judgment of Wells J. on the ground that a trust for the relief of poverty confined to such a class was not a valid trust. In the view of Roach J., who delivered the judgment of the court, such a trust lacked the necessary public character.
The appellant, while adopting the construction of the will accepted in the courts below, contends that the Court of Appeal erred in its view of the law. Appellant contends further that, while the class denned by the testator comprises the only persons who are to benefit “directly” from the trust, the testator has expressed a general charitable intention and has left his gift to operate in the field of “indirect” benefit.
In its popular sense, “charity” does not coincide with its legal meaning but, as stated by Lord Macnaghten in Pemsel’s case[12], adopting the argument of Sir Samuel Romilly in Morice v. Bishop of Durham[13],
“Charity” in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes, beneficial to the community, not falling under any of the preceding heads. In Verge v. Somerville[14], Lord Wrenbury said at p. 499:
To ascertain whether a gift constitutes a valid charitable trust so as to escape being void on the ground of perpetuity, a first inquiry must be whether it is public—whether it is for the benefit of the community or of an appreciably important class of the community. The inhabitants of a parish or town, or any particular class of such inhabitants, may, for instance, be the objects of such a gift, but private individuals, or a fluctuating body of private individuals, cannot.
Lord Greene M.R. in Compton’s case[15], said with reference to the above proposition that it is true with respect to all charitable gifts and is “not confined to the fourth class in Lord Macnaghten’s well known statement in Pemsel’s case.”
In the submission of the appellant, any trust for the relief of poverty creates, per se, a public benefit. Accordingly, while admitting that the trust here in question cannot, on the law as stated by Lord Wrenbury, be upheld as applied to the last three heads of Lord Macnaghten’s classification, the appellant submits that if the language here in question may be construed as the appellant seeks to construe it, the trust is valid with respect to the first head, namely, for the relief of poverty within the group defined by the testator.
The initial question, therefore, is as to the true construction of the language which the testator used. Appellant says that the words “for charitable purposes only” are to be construed as though the testator had said, “for such legal charitable purposes as the law recognizes” within the class of beneficiaries defined.
As I have said, this construction of the testator’s language found acceptance in the courts below, but I am regretfully unable to come to that conclusion. The word “charitable,” construed in its legal sense, comprises all of the four heads already mentioned, and I find nothing in the language used which permits me to eliminate therefrom any of them. To put the matter more plainly, I see no escape from reading the words used as though the testator had set out seriatim the said four heads. This being so, the testator has empowered his trustees, even on the appellant’s thesis, to apply the subject matter of the trust for charitable and non-charitable purposes, thereby empowering them to devote the whole, if they please, to the non-charitable. The “application of such income” is left entirely to the discretion of the directors of the company and the bequest is therefore void; Morice v. Bishop of Durham[16]. In my view, therefore, the basis of the argument of the appellant fails on this branch of the case.
In 1938 when the will here in question was executed, a testator might not unreasonably have thought, in the state of the authorities at that time, that a valid trust for purposes embracing all of the four heads of charity could be created for the benefit of a class such as the employees of a particular company and their dependents. In 1881 the case of Spiller v. Maude[17], had come before Jessel M.R. That case dealt with a fund derived from subscriptions made by members of a company of actors and actresses for the benefit of the members and their dependents. The learned Master of the Rolls came to the conclusion that poverty was clearly an ingredient in the qualification of members who should receive benefits and that the fund was, accordingly, charitable. Again in 1896, in In Re Buck[18], Kekewich J. decided similarly with respect to the funds of a Friendly Society. In 1900, also, in In Re Gosling[19], Byrne J. upheld as a good charitable trust, a fund for the purpose of pensioning off old and worn-out clerks of a particular firm.
In 1914, the case of In Re Drummond[20], came before Eve J., who held that a trust for the purpose of providing holiday expenses for the employees of one department of a company was invalid as not being a trust for public purposes but for private individuals. But, in 1920 the same learned judge, in Re Rayner[21], had to consider the validity of a trust for the education of children of the employees of a particular company. Eve J. distinguished his decision in Drummond’s case and held the trust then before him valid, being of opinion that the class of beneficiaries was sufficiently defined as a section of the public to support the gift. Although Lord Wrenbury’s judgment in Verge v. Somerville[22] was delivered in 1924, it was not until 1945 that the decsion in Rayner’s case was over-ruled by the Court of Appeal in In Re Compton, supra. In the meantime, the will of the testator here in question was executed.
By 1948 when the will of the testatrix was executed, In Re Hobourn[23], had been decided, although Gibson v. South American Stores[24], and Oppenheim v. Tobacco Securities Trust[25], had not. However, whatever may have been the view of the professional advisers of either the testator or the testatrix when the respective wills now in question were executed, the appellant does not argue now that the trusts here in question can be supported in law except as trusts for the relief of poverty. For the reason already given, the necessary foundation for such an argument does not exist upon the construction of the language used by the testators which, in my view, is the proper construction.
With respect to the argument that there is a whole field of “indirect” benefit left open within which the trust may validly operate, we have not the benefit of the view of either of the courts below, as this contention was for the first time put forward in this court. This argument is, of course, founded upon the use of the word “directly”.
It is contended that while the testator has prohibited the application of any part of the income for the direct benefit of an individual who does not fall within the specified class, the will permits the income to be applied to such objects as, for example, a hospital, as it is said, such a gift involves only indirect benefit, presumably, to the patients.
Had the testator stopped with the words “The Canada Life Assurance Company” where those words are used for the second time in the first limb of the paragraph, there might be considerable force in this contention. The testator, however, did not stop there, but went on to prescribe in the second limb that, “subject to the foregoing restrictions”, the application of the income, including
(a) “the amounts to be expended” and
(b) “the persons to benefit therefrom” (and here the word “directly” does not occur)
should be determined by the Board of Directors.
It is to be observed that while it is the trustees who are to disburse the income, it is the directors who are to control the application of the payments. The word “persons” in (b) above certainly does not exclude individuals. It includes them. If, therefore, according to the appellant’s contention, no individual may take a direct benefit, the directors could never, as the testator directs, determine the “persons” to benefit but only at best, the “classes of persons” who might be served by any particular institution or organization to which they might direct payments to be made. The Canada Life employees and their dependents are themselves a class but the testator has declared that even among that class, the selection of the actual beneficiaries is a matter for the directors.
Having imperatively prescribed that the “persons” to benefit shall be determined by the directors, the testator has made it clear, in my opinion, that it is individuals and not institutions or organizations that he had in mind. Accordingly, as a gift to or for the benefit of an individual must benefit that individual directly, I think that in prescribing in the second limb of the paragraph that “the persons to benefit therefrom” are to be determined by the directors, he has removed any ambiguity there might otherwise have arisen upon the phrase “the persons to benefit directly” in the earlier language. The testator had in mind I think, in the employment of the earlier language that while a gift to or for the benefit of a member of the specified class would involve direct benefit to him, it might, in many cases, also involve indirect benefit to others, e.g., relatives of the beneficiary. In making their selections from that class, however, the directors will be concerned only with persons to be directly benefited.
I therefore think that the testator has devoted the income for “charitable purposes” among the persons of the class which he has himself described, to the exclusion of all others. Accordingly, while the opening language of the paragraph “to pay the income thereof in perpetuity for charitable purposes only”, taken alone, could not well be broader for the purpose of expressing a general charitable intention, the language which follows makes it clear, in my opinion, that the testator had no general charitable intention but an intention that the income should be used for charitable purposes for the benefit only of the persons he specifies and for no one else. If this be the true view, the court is not in a position to apply the gift in any other way upon the failure of the testator’s gift.
I think the case at bar is within the principle of In Re Wilson[26], rather than within In Re Monk[27]. In National Anti-vivisection Society v. Inland Revenue Commissioners[28], Lord Simonds, in dealing with the doctrine of general charitable intention, said at p. 64:
It would be very relevant, if the society, conceding that the campaign against vivisection was not a charitable purpose, argued that there was yet a general charitable intention and that its funds were applicable to some other charitable purpose. That is not the argument. If it were, I should not entertain it, though it might in an earlier age have succeeded.
I would use the same language in the present case, and would dispose of the appeal as proposed by my brother Kerwin.
ESTEY J.:—The late Herbert Coplin Cox provided in his will that the residue of his estate should be held by his trustees upon trust (As to which see p. 96).
His widow, the late Louise Bogart Cox, included an identical provision in her will and both have been considered in this litigation. As a matter of convenience only the will of Herbert Coplin Cox will be referred to hereafter.
The Court of Appeal for Ontario reversed the judgment of Mr. Justice Wells and held that the foregoing provision did not constitute a valid charitable trust or, as stated by Mr. Justice Roach, writing the judgment of the Court:
... These trusts are not trusts for general public purposes; they are trusts for private individuals, a fluctuating body of private individuals but still private individuals. Because they are not for public purposes they are not charitable and are therefore void as offending the rule against perpetuities. Counsel for the appellant contends that the judgment of Mr. Justice Wells should be restored, declaring that the foregoing provision of the will constitutes a valid charitable bequest for the relief of poverty and, with respect to public benefit, he submits:
The rule is either that the element of public benefit must be present in every category of legal charity except in the case of trusts for relief of poverty; or that a trust for the relief of poverty of a class of persons per se creates a public benefit.
It is convenient first to consider how far public benefit is essential in the creation of a valid charitable trust. Charitable purposes and objects have been classified by Lord Macnaghten in Pemsel’s case[29], under four headings. These are trusts for (a) the relief of poverty; (b) the advancement of education; (c) the advancement of religion and (d) other purposes beneficial to the community not falling under any of the preceding heads.
In Oppenheim v. Tobacco Securities Trust Co. Ld.,[30], securities were left upon trust to apply the income
in providing for or assisting in providing for the education of children of employees or former employees of British-American Tobacco Co. Ld. … 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…
In the House of Lords it was held that this trust for educational purposes was invalid because the beneficiaries were limited to the children of employees of specified companies and, therefore, did not constitute a section of the community. Lord Simonds, at p. 306, stated:
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.
In the foregoing quotation Lord Simonds, with whom Lord Oaksey and Lord Morton of Henryton agree, makes it plain that it is not the number of beneficiaries that constitutes the test, but that however large the number, if the nexus between them is their personal relationship to a single propositus such as The Canada Life Assurance Company, they do not constitute a section of the community and, therefore, the trust is invalid, not being for a public benefit.
In Gilmour v. Coats[31], the House of Lords emphasized the same requirement of public benefit in order that a valid charitable trust for religious purposes may exist. The Privy Council emphasized the same requirement in relation to a trust falling under classification (d) (for other purposes beneficial to the community) in Verge v. Somerville[32], where Lord Wrenbury stated at p. 499:
To ascertain whether a gift constitutes a valid charitable trust so as to escape being void on the ground of perpetuity, a first inquiry must be whether it is public—whether it is for the benefit of the community or of an appreciably important class of the community. The inhabitants of a parish or town, or any particular class of such inhabitants, may, for instance, be the objects of such a gift, but private individuals, or a fluctuating body of private individuals, cannot.
The Oppenheim, Gilmour and Verge cases make it clear that public benefit must at least be found in charities classified under (b), (c) and (d) of Lord Macnaghten’s classification; further that the Oppenheim case makes it equally plain that in specifying the employees of The Canada Life Assurance Company and their dependents the testator had not created a trust for public benefit.
Counsel for the appellant, however, contends that public benefit is not essential to the creation of a trust under Lord Macnaghten’s classification (a) (for the relief of poverty).
Trusts for the relief of poor and needy relatives, usually described as the “poor relations” cases, have at least since 1754 (Isaac v. de Friez[33]), been held to be valid in courts of first instance and the Court of Appeal in England. These have been treated, in the Court of Appeal and in so far as they have been referred to in the House of Lords, as exceptions to the general rule that public benefit must be found in order that a charitable trust may be valid. (See Lord Simonds in the Oppenheim case, supra, at 308). There is also, in the Court of Appeal in England, a second exception to this general rule, of which Gibson v. South American Stores Ld.[34], is an illustration. In that case the trust was for the benefit of those
who are or shall be necessitous and deserving and who, for the time being, are or have been in the company’s employ ... 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 foregoing provision was held to be for the relief of poverty and the requirement of public benefit was raised by the Master of the Rolls at p. 191:
Under the law as it has now been established, and in the light of its 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?
The Master of the Rolls, after recognizing the “poor relations” cases as an exception or an anomaly, appeared to regard the decisions in Spiller v. Maude[35], In re Buck,[36], and In re Gosling[37], as constituting another exception to the rule requiring that in a valid trust public benefit must be found. In each of these cases the fund was held to have been created expressly for the benefit of poverty and the fact that the beneficiaries must be selected from an association or company did not prevent its being a valid charity. The learned Master of the Rolls, in appreciation of the fact that the issue in the foregoing oases had never been before the House of Lords, recognized the possibility that it might be otherwise decided in that House. He, however, without in any way discussing the principles involved, felt bound by the unreported judgment of the Court of Appeal in 1935, Re Sir Robert Laidlaw[38], of which no reasons were available. In his own words:
I think that, so far as I am concerned, this question has been determined by In re Sir Robert Laidlaw, on grounds which are not apparent, and I loyally follow them without affirming or disaffirming any of the grounds relied on by Harman J.
He, therefore, held the trust valid and the same position was taken by that court in Re Coulthurst[39]. The case at bar, however, does not come within either of the foregoing exceptions. It could not, nor has it been suggested that it falls within the “poor relations” group. Then, with respect to the second exception or group, illustrated by the Gibson case, supra, it must be observed that all of the cases that have been included thereunder were specifically created for the relief of poverty and no other charitable purpose. This is not such a case. The language here, without enumerating them, includes all the classifications as made by Lord Macnaghten, which, of course, would include poverty. Even if this exception should ultimately become established in the law, it ought not to be so far extended as to include a trust for all charitable purposes such as that here under consideration.
The fact that the “poor relations” cases and the group illustrated by the Gibson case, supra, have been treated as exceptions to the general rule that a charitable trust must be not only charitable in character but for a public benefit indicates that the general rule requiring public benefit is applicable to trusts for the relief of poverty. Moreover, that such is the correct view is strengthened by the statements to be found in the authorities and text books, of which the following may be noted:
Lord Simonds:
… the principle has been consistently maintained, that a trust in order to be charitable must be of a public character. It must not be merely for the benefit of particular private individuals: if it is, it will not be in law a charity though the benefit taken by those individuals is of the very character stated in the preamble. Williams’ Trustees v. Inland Revenue Commissioners[40].
Lord Porter in National Anti-Vivisection Society v. Inland Revenue Commissioners[41], stated:
One must take it therefore that in whichever of the four classes the matter may fall, it cannot be a charity unless it is beneficial to the community or to some sufficiently defined portion of it.
See also Lord Wright at p. 42.
Then (again the learned authors of Tudor on Charities, 5th Ed., p. 11, state:
In the first place it may be laid down as a universal rule that the law recognizes no purpose as charitable unless it is of a public character. That is to say, a purpose must, in order to be charitable, be directed to the benefit of the community or a section of the community. Whether public benefit exists in a given case is a question of fact. In National Anti‑Vivisection Society v. Inland Revenue Commissioners, supra, the House of Lords adopted the view expressed by Russell J. (as he then was) in Re Hummeltenberg[42]. Lord Wright, at p. 44, adopts the language of Russell J.:
In my opinion, the question whether a gift is or may be operative for the public benefit is a question to be answered by the court by forming an opinion upon the evidence before it.
and expressly approves of it. At p. 42 Lord Wright states:
The test of benefit to the community goes through the whole of Lord Macnaghten’s classification, though as regards the first three heads, it may be prima facie assumed unless the contrary appears.
Lord Simonds stated at p. 65:
I will readily concede that, if the purpose is within one of the heads of charity forming the first three classes in the classification which Lord Macnaghten borrowed from Sir Samuel Romilly’s argument in Morice v