Attorney General v Zedra Fiduciary Services (UK) Ltd & Ors

A charitable trust may take effect immediately even where the particular application of its property is postponed until a future event. The question is one of construction. A direction requiring accumulation until the fund can achieve the specified charitable purpose may be integral to that purpose rather than a mere administrative provision.

Where a charitable purpose later becomes practically incapable of fulfilment, the court may exercise its cy-près jurisdiction under the Charities Act 2011. A “vanishingly small” prospect of fulfilment may amount to practical impossibility. The statutory protection for national-debt accumulation trusts does not prevent a cy-près scheme which facilitates, rather than frustrates, the donor’s charitable intention.

The Attorney General sought declarations concerning a trust established by a 1928 deed under which a fund was to accumulate until it was sufficient, alone or with other funds, to discharge the National Debt. The current trustee supported the trust’s validity but disputed whether the court could alter its terms. Represented descendants of the original and later donors claimed resulting trusts, arguing that the trust was conditional or had failed for initial impossibility.

The court also considered whether an administrative or cy-près scheme could be made, whether section 9 of the Superannuation and other Trust Funds (Validation) Act 1927 restricted that jurisdiction, and whether the fund should immediately be applied in reduction of the National Debt.

1. Validity and purpose. The deed created a valid charitable trust. Its principal purpose was to benefit the nation by accumulating a fund which would eventually be applied, alone or with other available funds, in discharge of the National Debt. Its subsidiary purpose was to permit part of the fund to be applied in reduction of the National Debt if national exigencies required it.
2. No condition precedent. The gift to charity was immediate and unconditional. The words “until”, “from and after” and “then” concerned timing and machinery, not the existence of the trust. The obligation to accumulate arose on execution of the deed. The absence of conditional language and of an alternative gift supported that conclusion. The descendants’ resulting-trust claims therefore failed.
3. Impossibility and charitable intention. Initial impossibility is assessed when the gift takes effect. In 1928 there was a reasonable prospect, judged by contemporary beliefs and knowledge, that the fund could eventually discharge the National Debt. Later events making fulfilment practically impossible did not show that the purpose was impossible from the outset. In any event, the deed and admissible surrounding evidence demonstrated a general charitable intention to benefit the nation.
4. Cy-près jurisdiction. Altering the original purpose required a cy-près, not an administrative, scheme. The original purpose could not be carried out in practical terms and had ceased to provide a suitable and effective method of using the property under sections 62(1)(a)(ii) and 62(1)(e)(iii) of the Charities Act 2011. No separate general charitable intention was required because this was subsequent failure following an out-and-out charitable gift.
5. Effect of the 1927 Act. Section 9(1) protected the deed against rules of law which would invalidate or frustrate the intended accumulation. Properly construed, it did not prevent a cy-près scheme where the specific directions had become impossible through circumstances and the scheme would facilitate the donor’s charitable intention.
6. Choice of scheme. The court could not decide at this hearing whether the fund should be transferred to the National Debt Commissioners or applied for another charitable purpose. That decision required comparison of possible schemes by reference to the matters in section 67(3) of the Charities Act 2011, and was deferred.