Inland Revenue Comrs v McMullen

A trust which promotes the physical education and development of pupils at schools and universities may be exclusively charitable for the advancement of education. Education is an evolving concept. For young people, it encompasses a balanced and systematic process involving physical as well as spiritual, moral and mental development.

The mere promotion of games or sport is not necessarily charitable or educational. The required educational character may arise where sporting facilities, equipment, coaching and teacher training are purposefully linked to pupils undergoing formal education. Education need not be confined to a syllabus, campus, term time or formal instruction.

The Football Association established the Football Association Youth Trust to provide sporting facilities, equipment, courses, coaching and related assistance for pupils of schools and universities. The Charity Commissioners registered it as a charity under Section 4 of the Charities Act 1960.

Walton J held that the trust was invalid: [1978] 1 W.L.R. 664. A majority of the Court of Appeal, Stamp and Orr LJJ, upheld that conclusion, while Bridge LJ dissented. The trustees appealed.

The principal questions were how clause 3(a) of the deed should be construed and whether its objects were exclusively charitable as advancing education. Alternative arguments under the fourth category of charity and Section 1 of the Recreational Charities Act 1958 were left undecided.

1. Appeal allowed unanimously. Lord Hailsham LC delivered the leading speech. Lord Diplock and Lord Salmon expressly agreed with it. Lord Russell and Lord Keith gave concurring reasons. The House declared that the trust’s objects were exclusively charitable, restored its registration and set aside the Court of Appeal’s order.

2. Per Lord Hailsham LC, Lord Russell and Lord Keith, clause 3(a) had to be read as a whole. Its words concerning physical education and development were operative. They controlled the preceding reference to games and sports, excluded sedentary games and stated the purpose for which sporting facilities could be provided. The object was to promote pupils’ physical education and development as a supplement to their mental education.

3. Per Lord Hailsham LC, education and charity are evolving concepts. The contemporary education of young people is not confined to formal teaching, a prescribed syllabus, an educational campus or term time. Sections 7 and 53 of the Education Act 1944 recognised spiritual, moral, mental and physical development, recreation, physical training and voluntary participation as aspects of the statutory educational system.

4. The mere playing or promotion of games is not, by itself, necessarily charitable or educational. The present trust was different. Its beneficiaries were pupils undergoing formal education, and its facilities, equipment, coaching and teacher training were directed to their physical education. That nexus was sufficient even though facilities might serve several institutions, operate away from their campuses or be available outside term time.

5. The object was sufficiently clear and capable of application by the trustees or, if necessary, the court. Practical difficulty in selecting facilities or activities did not invalidate the trust. The House declined to impose a general boundary for every sport or leisure pursuit; each future case would require consideration on its own facts.

6. The House did not decide whether physical education unconnected with pupils would be charitable. It also reserved the alternative questions under Lord Macnaghten’s fourth category and Section 1 of the Recreational Charities Act 1958. The cause was remitted to the Chancery Division, and the trustees and Attorney General received their costs in the Court of Appeal and House of Lords.

1. House of Lords: The appeal was allowed unanimously. The Court of Appeal’s order was set aside, the trust was declared exclusively charitable and the cause was remitted to the Chancery Division.

2. Court of Appeal: Stamp and Orr LJJ upheld the conclusion that the trust was not charitable. Bridge LJ dissented. The order dated 18 October 1978 was set aside by the House of Lords.

3. High Court, Chancery Division: Walton J held that the trust was not a valid charitable trust: [1978] 1 W.L.R. 664.

4. Charity Commissioners: The trust was registered as a charity under Section 4 of the Charities Act 1960.