Cawdron & Anor v Merchants Taylors' School & Ors

A trust’s purpose must be characterised by considering the substance and context of the gift. A provision for assistance to a defined class may be charitable where financial need is the criterion, even if the class is connected with a particular school or organisation. “Poverty” is not confined to destitution and may include persons who must go short having regard to their circumstances.

Where a charitable scheme contains several purposes, a later purpose is not invalid merely because an earlier purpose might fail, if the scheme shows that the later purpose was intended to operate immediately, subject only to sufficient provision for the earlier purposes. The court may approve a compromise involving charity property where the arrangement materially benefits charity and adequately protects its interests.

The claimants held Durrants, a valuable freehold property, as trustees. Its purchase was funded principally from the proceeds of an earlier sports ground acquired with money raised under a 1917 War Memorial Fund resolution.

The claimants, the School and associated parties sought approval of a compromise concerning the sale and redevelopment of Durrants. The court had first to determine the trusts affecting the property and whether subscribers, or the Crown, retained any beneficial interest through a resulting trust.

The central issues were whether the purposes of the Fund were valid charitable trusts, whether a later purpose was affected by any alleged invalidity of an earlier purpose, and whether the proposed compromise should be approved.

1. Trusts affecting Durrants. The applicable trusts were those contained in the October 1917 resolution. The 1925 declaration of trust was ineffective to vary them because the trustees and committee lacked authority to alter the purposes for which the Fund had been raised. The registration under the War Charities Act 1916 was only a précis and did not alter the trusts.
2. Validity of object (a). The two limbs of object (a) were charitable purposes for the relief of poverty. The court distinguished a gift motivated by general benevolence from a private bounty. The wording, the committee’s discretion and the reference to assistance showed that financial need was the criterion. Poverty includes persons who have to go short in the ordinary sense, having regard to their status. The first limb was therefore not a trust for the advancement of education but a valid poverty-relief trust.
3. Alternative validation. Even if either limb were not exclusively charitable, section 1(1) of the Charitable Trusts (Validation) Act 1954 would validate the disposition because the committee could apply the Fund exclusively for charitable purposes. This alternative reasoning adopted the approach in Ulrich v Treasury Solicitor.
4. Object (c). The alleged invalidity of object (a) did not infect object (c). The resolution showed that object (c) was intended to operate immediately, subject only to attaining the earlier purposes or setting aside sufficient money for them. The rule concerning invalidity by contagion and remoteness therefore did not assist the subscribers.
5. Compromise. No persons other than charity and the Society had a beneficial interest in Durrants or its sale proceeds. The proposed arrangement substantially benefited charity, reflected its interests in the division of proceeds and avoided the substantial risk that the sale and replacement sports facilities would be lost. The court approved the claimants’ entry into the sale contract and Heads of Agreement and the School’s entry into the Heads of Agreement.

First-instance decision. No prior judgment or appeal is stated in the judgment.