Young & Anor v HM Attorney General & Ors

Assets held by a charitable company are not held on a separate charitable trust merely because they are applied to charitable objects or described as permanent or inalienable. A separate trust requires an express declaration or conduct consistent only with its existence. A gift to a charitable company is ordinarily an outright gift for the company’s general purposes unless its terms establish a trust. Restrictions in a company’s constitutional documents do not, without more, create trust property and may be displaced when insolvency intervenes. Accordingly, the collection formed part of the company’s assets available to meet insolvency costs and creditor liabilities.

The administrators of Wedgwood Museum Trust Limited sought directions during the company’s insolvency concerning ownership of the Wedgwood collection. The principal issue was whether the collection was beneficially owned by the Museum Company or held on a separate charitable trust, so that it was unavailable to the company’s general creditors. A consequential question concerning the trustee’s right of indemnity was left unresolved because the evidence was insufficient and would arise only if a separate trust existed.

The collection had been transferred to the Museum Company by the Trading Company in 1964. Further items, including the Stubbs portrait and the Vaughan Williams pictures, were said to have been given on terms requiring public display or preservation. The court therefore had to determine whether those transactions, the company’s objects, later constitutional provisions and its accounts established a special trust.

1. The collection was available to meet the Museum Company’s insolvency costs and liabilities to creditors. The court did not determine the separate question of the trustee’s indemnity.
2. A charitable company does not hold its assets on trusts corresponding to its objects merely because it is charitable. The general purposes of a company are ordinarily identified from its memorandum and articles, subject to charity law while solvent; on insolvency, the company’s purposes are governed by the insolvency regime. The court relied on Bowman v The Secular Society [1917] AC 406 and the first-instance authorities concerning charitable companies.
3. A separate charitable trust may arise by express declaration or impliedly from a course of conduct and dealing consistent only with a trust. The 1964 deed poll identified the Museum Company as beneficiary and contained no sub-trust. The delivery and receipt were therefore consistent with an outright gift to the Museum Company for its general purposes.
4. The subjective intention that the collection should be permanent and inalienable was an aspiration rather than a legally effective condition. The Vaughan Williams gifts and the Stubbs portrait were likewise not shown to be subject to terms sufficient to create a charitable or other trust.
5. The company’s name, objects, restrictions on disposal, accounting treatment and later memorandum provisions did not alter that conclusion. The disposal restriction was a constitutional limitation rather than trust language. In any event, the insolvency regime displaced such restrictions on insolvency.