Fafalios & Ors v Apodiacos & Ors

A trust instrument must be construed objectively, using its language, purpose and relevant surrounding circumstances. In a charitable trust, long subsequent practice may assist where the instrument is genuinely ambiguous, but cannot contradict a clear trust.

Trustees may challenge a later variation purportedly made by predecessor trustees. The Mathieson principle permits trustees to particularise sparse or uncertain trust terms, but not to introduce purposes inconsistent with the donors’ original purposes. A direction-making power remains subject to the trust’s overriding purpose.

A cy-près scheme is unavailable merely because trustees hold substantial reserves unless the statutory conditions are established. The court should preserve the spirit of the gift and cannot convert a burial trust into a fund for general charitable purposes.

The claim concerned the control and use of surplus funds held by trustees of the Greek Cathedral Cemetery Enclosures Trust, a charitable trust originating in 1860. The claimants, trustees of the Greek Cathedral Trust, sought declarations that the Cemetery Trustees were bound by a 1935 declaration to apply surplus funds according to resolutions of the Cathedral Assembly. Alternatively, they sought a cy-près scheme.

The Cemetery Trustees disputed the validity of the 1935 declaration, contended that the Assembly was not the relevant Greek Community, and accepted that a cy-près scheme might be required only to clarify the persons entitled to burial. The court determined the effect of the 1860 declaration, the validity of the 1935 declaration, the identity of the Greek Community, and whether the statutory conditions for a cy-près scheme had arisen.

1. Interpretation. The 1860 Declaration of Trust required all property held by the Cemetery Trustees, including proceeds, income and profits from burial rights, to be applied for the interment of members of the Greek Community in London. The court applied the objective approach in Marley v Rawlings [2014] UKSC 2 and First National Trustco (UK) Limited v McQuitty [2020] EWCA Civ 107. Subsequent practice could assist under Attorney General v Sidney Sussex College (1869) L.R. 4 Ch. 722 only if the instrument was ambiguous.
2. Directions. The Greek Community could direct how the funds were spent and administered, but only in furtherance of the overriding burial purpose. In the absence of a direction, the Cemetery Trustees retained decision-making freedom within that purpose.
3. 1935 declaration. The Cemetery Trustees were entitled to challenge the validity of a later declaration made by predecessor trustees. The principle in Attorney General v Mathieson [1907] 2 Ch. 383, as explained in Shergill v Khaira [2015] AC 359, did not prevent that challenge. The 1935 declaration was void because the 1860 trust contained no gap requiring completion and the later declaration attempted to introduce purposes inconsistent with the donors’ purposes. It was also void for uncertainty because it contained no sufficient limitation on the purposes for which funds could be applied.
4. Greek Community. The expression referred to the organisation now represented by the Cathedral Assembly. It was not a separate organisation that had ceased to exist.
5. Cy-près. The conditions in section 62 of the Charities Act 2011 were not established. The evidence did not show that reserves would not be required for burial purposes, nor that the original purposes had ceased to provide a suitable and effective method of using the property. The court declined to make a scheme, but reminded the Cemetery Trustees to reassess their needs and apply for a scheme if surplus funds were shown not to be required.
6. The claimants’ proposed scheme for general charitable purposes was not justified by the spirit of the gift. The final issue concerning burial eligibility did not require a scheme because the relevant body still existed, although the existence of other Greek Orthodox churches might justify future consideration.