CHARITABLE TRUSTS : CLASSIFICATION IN NIGERIA

                  CHARITABLE TRUSTS : CLASSIFICATION

trusts are trusts that are made for the fulfillment of purpose that is for the public benefit and which falls within purposes that are described as charitable by the law. The classification of what is described as charitable was first made in the preamble to the statute of Elizabeth (43 Eliz. 1, c. 4, 1601). The list included gifts or trusts for : the relief of the aged , impotent and poor people, the maintenance of sick and maimed soldiers and sailors, the mainteneance of schools and learning, free schools and scholars in universities, the repair of bridges, ports, churches and highways, the education of orphans, the support of young tradesmen and persons decayed. The amble of the statute has since been repealed but the spirit of the statute is sometimes used to decide if a trust is charitable or not. The current list of purposes that are described as charitable were enumerated by Lord McNaghten in Commissioners of Income Tax v Pemsel. The purposes are as follows:
I.) Relief of Poverty
II.) Advancement of Education;
III.) Advancement of Religion;
IV.) Other such purposes beneficial to the community ( which come within the words or spirit of the preamble to the statute of Elizabeth).

I.) Relief of Poverty : The term ‘relief’ was defined by Gibson J in Joseph Rowntree Memorial Trust Housing Association V AG as persons in questions that have a need attributable to their condition which requires alleviation and which it would be difficult for such persons to alleviate themselves. ‘Poverty’ in this instance does not necessarily mean destitution_ Lord Evershed in Re Coulthurst. Poverty merely connotes that the beneficiaries are in straitened circumstances and unable to maintain a modest standard of living (determined objectively).In Re Coulthurst, a trust which sought to advance a gift to the widows and orphans of deceased officers of the bank that were most deserving of such assistance having regard to financial circumstances was held to be a charitable trust. Lord Evershed in the aforementioned case further stated that it is not necessary for the word poverty to be used in the instrument so long as from the construction of the instrument it can be imported that the settlor intended for the trust to be used for the relief of the poor.  A trust which is not exclusively for charitable purposes would not be held as a charitable trust.Thus in Re Sanders’ Will Trusts, a gift by a testator for the provision of dwelling places for the working classes and families in area of Pembroke Dock was held not to be a charitable trust for the relief of poverty because the word ‘working class’ imported a class of people who were not necessarily poor could also benefit from the trust.In Re Niyazi’s Will Trust, however,  a gift by a testator to the Mayor of Famagusta for the construction of a working men’s hostel was held to be a charitable trust. Megarry VC in this case explained the reasoning for this decision by stating that : I.) A gift that is not prima facie confined to the relief of poverty may be inferred to be exclusively for the relief of poverty if it can be inferred form the construction of the instrument that the settlor intended the trust to be directed in that manner II.) The word ‘Hostel’ connotes a type of dwelling which is not luxurious and would be satisfactory to people that are not earning a significant amount of money. III.) The trust fund money was £ 15,000, which was not enough to build anything other than a rudimentary housing facility devoid of luxuries. IV.) There was also a shortage of housing facilities in Famagusta at the time and whenever there is a housing crisis, it is the indigent that are affected the most.

II.) Advancement of Education: Education here implies the instruction of the public on some field of knowledge. The court held in Re Hopkin’s Will Trust that a trust that bequeathed money to Francis Bacon society to search for manuscripts of plays said to have been written by Shakespeare but believed to have been written by Francis Bacon was a charitable trust for the advancement of education as the discovery of such manuscripts would be of the greatest value to history and to literature. It was contemplated that the results of that search would be disseminated to the public. Advancement of education does not include  purposes which comprise of the mere accumulation of public knowledge without any provision for teaching or education- Re Shaw. In Re Shaw, the executors of the trust were unable to prove how the discovery of a 40 letter alphabet and the translation of the play Androcles and the Lion by the settlor (George Bernard Shaw) would be for the public benefit. There was also no aim by the settlor expressly stated for the instruction of the public in this 40 letter alphabet to be done. The principle on research qualifying as a subject matter can be summarised interalia in McGovern v AG as thus : (I.) the subject matter of the proposed research must be a useful object of study and II.) there must be a contemplation of the knowledge acquired as a result of the research being disseminated to others.
The court in considering the usefulness of the object of study would take judicial notice of other similarly decided matrers and may consider the opinion of expert witnesses. The court would, however, not consider the opinion of donors in reaching thids conclusion. In Re Pinion, the opinion of expert witnesses was used by the court in coming to the conclusion that the testator’s gift to the National Trust of a studio and contents to be maintained as a collection was a massive piece of junk and as such  the charitable trust failed. Examples of trusts that have been held as charitable trusts for the advancement of education include: Trusts for promotion of choral singing in London (Royal Choral Society v Inland Revenue Commissioners), furtherance of the Boy Scout movement by helping to purchase sites for camping (Re Webber), promotion of works of a famous writer (Re Shakespeare Memorial Trust), Chess Playing ( Re Dupree’s Trust), prize for sports in a school (Re Mariette).

III.) Advancement of religion: Religion is defined by the oxford dictionary as recognition on the part of man of some higher unseen power as having control of his destiny as being entitled to obedience, reverence and worship or a particular system of faith and worship. A society which promotes ethical standards or even demands of its’ members to abide by the highest personal and social standards is not a religion- United Grand Lodge of Freemasons in England & Wales v Holborn BC. In the aforementioned case, Donovan LJ stated that the advancement of religion means to promote it, to spread its message ever wider among mankind, to take some positive steps to sustain and increase religious belief. For the gift to be held as qualifying to be one for the charitable purpose of advancement of religion, the organisation must be engaged in activities for the advancement of the religion and that religion must not be subversive of morality. In my opinion, it is highly unlikely that a court would hold a trust for the advancement of Satanism as a trust for the advancement of religion in Nigeria. It is important to note that a religious gift subversive of morality is not the same thing as a religious gift that is construed as ridiculous or stupid or deluded. The latter would still be regarded as a trust for the advancement of religion. In Thornton v Howe, a trust for the publication of the works of Joanna Southcote who believed that she’d miraculously conceive and give birth at an advanced age, to the second messiah was held to be a valid charitable trust for the advancement of religion.
Gifts to Officials : This refers usually to gifts to religious officers such as a vicar or a bishop. There are three categories of such gifts:
I.)  Where the donor gives property to the official and invests him with an absolute discretion as to how he should apply it :  In this situation, a valid charitable trust would usually be created. In Re Garrard, a gift to the vicar and churchwardens of Kingston to be applied by them in such manner as they shall in their discretion deem fit was held to be a valid charitable trust for the advancement of religion.
II.)  Where the donor gives the official property for exclusively charitable purposes: Such a gift would be charitable as in Re Bain where there was a gift to the vicar “for such objects connected with the church as he shall think fit” and in Re Simson where the gift was to a vicar “for his work in the parish”.
III.) Where the donor gives property to the official and specifies purposes which are not exclusively charitable: The general rule for certainty of objects of a charitable trust is that the trust should be exclusively for charitable purposes. This rule applies in charitable trusts for the advancement of religion. In Farley & Ors v Westminster Bank ltd, a gift by a testator for ‘parish work’ was held to be void as the term ‘ parish work’ was too vague and imported that the funds could be used for other purposes which may not be charitable. A trust for the purpose of advancement of religion in which the construction of the instrument makes it possible for a non-charitable purpose to be construed as part of the directions for the trust may not be held as void if the settlor gives the trustees the discretion to invest in charitable purposes. In the Nigerian case of Bishop S.C. Phillips v R.T. Phillips, a testator made a gift for the proceeds of the rent or sale of one of his houses to be used at the trustee’s discretion for a scheme whereby his name would be continually kept in remembrance or perpetuated  in connection with the work of the Lagos Church Mission. The court held that a valid charitable trust for advancement of religion was created because it could be discerned that the trustees were given the liberality to decide upon the particular charitable purpose within the wordings of the instrument to engage in and because it was determined by the court that the Lagos Church Mission was a charitable institution.

IV.) Other such purposes beneficial to the community ( which come within the words or spirit of the preamble to the statute of Elizabeth) :
Relief of aged, impotent & poor people. The words relief for the aged , impotent and poor people as contained in the preamble to the statute of Elizabeth are to be interpreted disjunctively rather than conjunctively. It is not nedcessary for the old people to also be impotent and poor - Re Glyn. This principle was applied in Joseph Rowntree Memorial Trust Housing Association v AG. In that case, the claimant , a housing trust designed a scheme for building of small self-contained dwellings for sale to elderly people on long leases in consideration of a capital payment. Male applicants had to be 65 years old and female applicants had to be 60 years old to qualify for the housing scheme. Also, applicants had to be able to pay the service charge, to live an independent life and to be in need of the the type of accommodation provided. The request by the claimant for the scheme was rejected by the Charitable Commissioner on the ground that the scheme provided benefits by contract and not by bounty and was merely a commercial enterprise. Claimant appealed. The court held that the absence of a bounty ( gift to the class of people benefitting from the scheme) for the provision of subsidised housing for the aged would not make the charitable trust for the relief of the aged void.
Recreational facilities : The general rule is that provision of recreational facilities is not a charitable purpose (Re Nottage). The exception to this rule is when the recreational facility is to be provided in an educational institution as in Re Mariette where the court held that a gift for the provision of prizes for sports activities in a school was a charitable purpose.
Animals : The rule as to when a trust for the benefit of animals is valid as a charitable trust is that the directions of the trust must be somewhat beneficial to humans. In Re Wedgwood, the court held that a gift for the ‘protection and benefit of animals’ was valid as a charitable trust because it promoted public morality by checking an inborn tendency towards cruelty. This test of public morality promotion was applied in University of London v Yarrow in which a gift to a hospital for sick animals was held as a charitable trust. The court, however, did not find the trust Re Grove-Grady as one which satisfied the requirement that the trust be somewhat beneficial to humans. In Re- Grove Grady, a gift to set up an animal sanctuary where all animals were allowed to live free from ‘molestation or destruction by man’ was held not to be a charitable trust as the trust implies that humans could not use the animals for beneficial purposes such as for scientific purposes. Also, the trust did not in any way guarantee the absence or diminution of pain or cruelty by the animals in the park towards each other.
Political purposes :  ‘Political purposes’ here connotes attempts to change the law and gifts to further the agenda of political parties.Generally, trusts for the advancement of political purposes are not valid as charitable trusts. In McGovern V AG,a trust established by Amnesty International was held not to be a charitable trust because some of the purposes of the organisation such as procuring the abolition of torture , or inhuman or degrading treatment were political. The reasoning behind trusts for political purposes not being charitable trusts was explained by Lord Parker in Bowman v Secular Society ltd. He stated that a trust for political purposes could not be a trust for charitable purpose because the court has no means of ascertaining whether a proposed change in the law will or will not be for public benefit.Trust instruments that have other valid charitable intendments as their primary purpose but have incidental political purposes in the trust direction will, however, be held as valid charitable trusts. In Re Scowcroft, a gift for the maintenance of a village club & reading room ‘to be used for the furtherance of conservative principles’ was held to be a valid charitable trust.
Children’s home : A trust for the welfare and benefit of children in a children’s home has been held not to be a charitable trust- Re Cole. In Re Sahal’s Trust , a trust for the funding of a children’s home was held not to be a charitable trust. The explanation for the judgement in Re Cole is that the term included the term ‘welfare’ which is too vague and could import the provision of facilities which are non-charitable such as the provision of TV sets for the children which at the time was a luxury.

CHARITABLE TRUSTS : PUBLIC BENEFIT
For a trust to be charitable, it must be beneficial to the general populace or to a community or to a section of the public. A trust that is made available to the general public but only utilised by a small sub- section of the public is for the public benefit but a trust that is afforded to a subsection of people in a community when such a trust would have been advantageous to the entire community at large is not a charitable trust that is beneficial to the public - Inland Revenue Commisssioners v Baddeley. Lord Wrenbury in Verge v Sommerville defined public benefit as a benefit that would acrue to a community or an appreciably important class of community such as the inhabitants of a parish or town or any particular class of such inhabitants but a gift for the benefit of a private individual or for a fluctuating body of private individuals cannot be classified as a gift for public benefit. This definition was applied in Williams Trustees v Inland Revenue Commissisoners in which it was held that a gift that was made to an institute in London for the promotion of Welsh culture was not a charitable gift as that gift was being given to a ‘floating body of individuals’.The general rule is that when there is a personal nexus between the donor and the beneficiaries,there can be no charitable trust. This rule was applied in Re Compton where a gift on trust for education of the children of three named relatives of the settlor was held not to be a charitable trust and in Oppenheim v Tobacco Securities Trust Co. Ltd in which a trust for education of employees of British American Tobacco failed as a charitable trust and also in the Nigerian case of Iyanda v Ajike where the trust for the provision of a private prayer room failed. Failure of the claimant to prove how the trust will be beneficial to the public would be fatal to his matter. In Gilmour v Coats, the court held that a gift to 20 cloistered nuns who devoted themselves to prayer and contemplation and engaged in no work outside the convent was not a charitable trust because the nuns had minimal contact with the society and as such a trust for their care would not be beneficial to the populace. 

Personal nexus and public benefit : A charitable trust in which a personal nexus exists between the settlor and the class of people that would benefit from the purpose trust may be held as a valid charitable trust if it can be established that the main purpose of the trust is not to benefit the people that have a personal relationship with the settlor but rather the benefit that would acrue to this people is merely incidental to the main purpose of the trust. This was the case in Re Koettgen’s Will Trust in which a trust for promotion and furtherance of communication and education of British Born subjects, subject to a direction that a preference be given to the employees of a company. The court held that a valid charitable trust was created. However, in IRC v Educational Grants Association limited, the court departed from its’ decision in Re Koettgen’s Will Trust. In IRC v Educational Grants Association ltd, there was a trust created for the advancement of education. A majority of the capital accruing to the trust was contributed by Metal Box ltd and 85 % of the income from the trust was being used for the education of the employees of the Metal Box ltd. The court held that the trust was not a charitable trust but was merely a private purpose trust for the benefit of the employees of Metal Box ltd. A trust for the relief of the poor is generally a charitable trust. The rule on relief of the poor being a charitable trust extends to a trust for the relief of the poor in which the settlor has a personal relationship with the people that will benefit from the purpose trust if the settlor devises the gift for the purpose of aiding unnamed poor relations or employees. This is an exception to the general rule that a personal nexus between the settlor and the beneficiaries would disqualify a trust from being a charitable trust. This exception was applied in Re Scarisbrick, in which a bequest was made on trust ‘for such relations of my said son and daughters as in the opinion of the survivor shall be in needy circumstances’ and in Gibson v South American Stores, the court held that a trust for the relief of poverty of employees of a particular employer was a trust for a charitable purpose.The situation is different if the beneficiaries of the gift for the relief of the poor are named personal relations of the settlor as in Re Compton.
CHARITABLE TRUSTS : ADVANTAGES OF CHARITABLE TRUSTS
The advantages of a charitable trust are : (I.) Charitable trusts will not fail for uncertainty of objects (ii.) Charitable trusts are not caught up by the rule against perpetuities (rule against excessive duration)  (iii.) Charitable purpose trusts are valid iv.) Charitable trusts are partially exempt from the rule against perpetuities (rule against remote vesting).
Certainty of objects and charitable trusts : The test for certainty of objects in charitable trusts is not whether the particular charitable purpose is named but rather whether the objects are exclusively charitable. Thus, in Bishop SC Phillips v RT Phillips, a trust for a charitable purpose which was not specifically mentioned was held to be valid but in Re Gillingham Bus Disaster Fund, a trust for ‘worthy causes’ in memory of the deceased in the accident failed because the term ‘worthy causes’ imported that the trust could be used for purposes which were not exclusively charitable.In a charitable trust, the use of the clause ‘charitable or benevolent’ in the instrument would lead to the trust failing for non-exclusiveness for charitable purposes. This was held in Chichester Diocesan Fund v Simpson. The use of the clause ‘charitable and benevolent’ in the trust instrument would be interpreted conjunctively by the court. This means that the trust would be interpreted as being for such charitable purposes or for such benevolent purposes which are charitable. In Re Best the words upon trust for such charitable and benevolent institutions were interpreted by the court to mean that the trust funds were to be directed for charitable purposes and for such benevolent charitable purposes that could be carried out. An example of a benevolent charitable purpose is building a house and gifting it to poor people in the society. A charitable trust would not fail for uncertainty of objects for the singular reason that there is an incidental non-charitable purpose in the trust instrument. In Re Coxen, a testator bequeathed £ 200,000 to the Court of Aldermen of the City of London on trust to pay: (a.) £ 100 per annum to provide a dinner for the trustees when they met on trust business; (b.) One guinea to each trustee who attended the meeting; (c) balance of income for benefit of orthopaedic hospitals. The court held that the gift to the orthopaedic hospital was charitable and that the provision of bounty to the trustees for meeting on trust business was an incidental non-charitable purpose.
The rule against perpetuities and charitable trusts : The rule against perpetuities stipulates that an interest in a trust property should not vest outside the perpetuity period (21 years). There are two means by which this rule operates and these are :
Rule against remote vesting : This is the rule that a contingent interest in a   property should not vest after the period of lives in being as at the coming into fruition of the instrument plus 21 years. The contingent interest will be void if it is possible to imagine a sequence of events rendering the possibility that the interest might vest outside the perpetuity period. The rule against remote vesting does not apply to vested interests in the trust property. Vested interests could be either “vested interests in possession” or “vested interests in interest”. A vested interest is a gift to a beneficiary that becomes valid without the beneficiary needing to fulfill any condition. A vested interest is in possession if the interest is granted as a gift for life to the beneficiary or as an absolute gift to him. A vested interest is in interest if the beneficiary would have a right to possession of that property in future. Example : If a gift is given to A for life and the remainder to B absolutely then A has a vested interest in possession of the property and would be entitled to income accruing from the property while B has a vested interest in interest on the property and would be entitled to the capital from that property and to absolute possession of the property when A dies. The rule against remote vesting applies to charitable trusts and to other forms of trusts such as resulting trusts, constructive trusts interalia. In Re Lord Stratheden & Campbell, a gift to Central London Rangers which was contingent upon the appointment of the next lieutenant Colonel was held by the court to be in breach of the rule against perpetuity because there was a possibility that the next lieutenant Colonel could be appointed outside the perpetuity period of the trust instrument.The rule against remote vesting in charitable trusts is commonly applied in charitable concessions. The rule against remote vesting in charitable concessions states that a gift which vests in a charitable organisation with a gift over in favour of a non- charitable organisation on the occurrence of an event is void if the event occurs outside the perpetuity period. The rule also applies to gift overs from non-charitable organisations in favour of charitable organisations. In Re Bowen, a testator who died in 1847 The exception to the rule against remote vesting in charitable concessions occurs when the gift over is from one charitable organisation in favour of another charitable organisation.This principle was applied in Re Chardon where the court held that a trust which gave funds to a cemetery company subject to the income being used for the maintenance of two specified graves with a gift over to another charitable organisation was not in violation of the rule against perpetuities (rule against excessive duration) The rationale for this ruling is that (I.) an outright gift of funds to a cemetary company is considered as a gift for a charitable purpose (II.) The maintenance of the two specified graves albeit a non-charitable purpose is merely incidental to the main purpose of the testator which was to create a charitable trust for the maintenance of all the tombs in the cemetery. III.) The gift over being to another charitable organisation was not caught up by the rule against remote vesting in charitable concessions. The rule in Re Chardon was applied succesfully in Re Tyler where it was held that a trust created by a testator bequeathing £ 42,000 in stock to the trustees of the London Missionary Society with a gift over to the Blue Coat School, London if the society failed to keep a family vault at Highgate Cemetery in good repair was a charitable trust that was not in violation of the rule against remote vesting beyond the perpetuity period. The rule against remote vesting beyond the perpetuity period would, however, apply in charitable concessions if it can be established that the non-charitable purpose which the testator directed the trust property to be applied towards was the main purpose of creating the trust. This was held in Re Dalziel . In Re Dalziel, the testatrix gave the governors of St. Bartholomew’s hospital £ 20,000 ‘subject to the condition that they shall use the income’ for the upkeep and repair of a mausoleum in Highgate Cemetery, with a gift over to another charity ‘if they failed to do so’. The court held that the maintenance of the mausoleum ( a large stately tomb or building housing such a tomb or several tombs) was a non-charitable purpose which was so onerous on the trustees that the settlor could not have intended that the mausoleum’s maintenance to be anything other than the primary purpose of creating the trust. The trust being a trust of imperfect obligation was caught up by the rule against remote vesting.

     Rule against excessive duration or rule against inalienability of property: This rule stipulates that a trust property should not be held beyond the perpetuity period (lives in being plus 21 years). The rule against excessive duration does not apply to charitable trusts. This is because a gift which vests in one charity, subject to any express declarations to the contrary, vests forever for charitable purposes.