Oppenheim v Tobacco Securities Trust Co Ltd

An educational trust is charitable only if it benefits the community or a section of the community. A class must be sufficiently numerous, and its distinguishing quality must not depend upon a personal relationship with particular individuals.

Common employment by a designated employer is a personal nexus. Employees of particular companies, and their children, therefore do not constitute a section of the community merely because the class is large. The trust consequently lacks the public benefit required for charitable status. The exceptional authorities concerning relief of poverty follow a distinct line and do not govern educational trusts.

A settlement created a perpetual trust to educate children of present or former employees of the British-American Tobacco Company Limited and its subsidiary or allied companies. The relevant companies employed more than 110,000 people. Unless charitable, the trust was void for perpetuity and the property resulted to the settlors’ estates.

Roxburgh J held himself bound by In re Compton [1945] 1 Ch 123 and In re Hobourn Aero Components Ltd’s Air Raid Distress Fund [1946] 1 Ch 194 to declare the trust void, except as to Scottish property not in issue. The Court of Appeal dismissed the appeal by a formal decision. The central issue before the House was whether children connected by their parents’ common employment formed a section of the community for the public-benefit requirement of charity.

1. Appeal dismissed by a majority of four to one. Lord Simonds and Lord Normand delivered the principal majority speeches. Lord Oaksey agreed with Lord Simonds, while Lord Morton of Henryton agreed with both Lord Simonds and Lord Normand. Lord MacDermott dissented.

2. Per Lord Simonds, public benefit is required for every class of charity, including advancement of education, subject to the anomalous and distinct authorities concerning relief of poverty. Possible beneficiaries must not be numerically negligible. More importantly, the quality distinguishing them from the community must not depend upon their personal relationship with a particular individual or particular individuals.

3. Per Lord Simonds and Lord Normand, the children’s relevant common quality was that their parents were employed by designated companies. The relationship created by a contract of service was personal and private. Aggregating many such relationships did not create a public element. The number of employees, the value of the fund, the scale of the undertaking and other variable circumstances could not transform the personal nexus of common employment into a public quality.

4. Per Lord Simonds, In re Compton [1945] 1 Ch 123 and In re Hobourn Aero Components Ltd’s Air Raid Distress Fund [1946] 1 Ch 194 correctly treated common kinship and common employment as insufficient public nexuses. Per Lord Normand, In re Drummond [1914] 2 Ch 90 was properly approved and In re Rayner (1920) 122 LT 577 properly disapproved.

5. Per Lord Simonds, the Attorney-General’s ability to enforce a charitable trust is a consequence of charitable status, not a test for establishing it. The poor-relations and poor-employees cases followed a separate historical line. The House expressed no concluded view upon their correctness.

6. Lord MacDermott dissented. He considered the class substantial and not obviously private. He regarded the personal-or-impersonal nexus test as arbitrary and inconclusive, and would have assessed public benefit from all the circumstances, including the size and importance of the class and the educational value of the trust. He would have allowed the appeal.

The appeal was dismissed with costs.

1. House of Lords: By a majority of four to one, dismissed the appeal and affirmed the declaration that the trust was void, except as to the Scottish property not in issue.

2. Court of Appeal: Dismissed the appeal by a formal decision, applying In re Compton [1945] 1 Ch 123 and In re Hobourn Aero Components Ltd’s Air Raid Distress Fund [1946] 1 Ch 194.

3. High Court, Chancery Division: Roxburgh J declared the trust void, except as to the Scottish property, because he was bound by the same Court of Appeal authorities.