I move that the Bill be now read a Second Time.
The Bill is designed to continue in being the present Commissioners of Charitable Donations and Bequests in Ireland, to consolidate and amend the various statutes relating to the Commissioners, and to make certain changes in the law of charities.
At the outset, I think I should pay tribute to the Commissioners for the excellent work they have done and continue to do. They are an unpaid body who devote an amount of their time to what are very important functions in the life of the community. As at present constituted, they date back to an enactment of 1844, and, in the years since then, they have an outstanding record of public duty and devotion to the obligations imposed on them. They are drawn from men of different religious persuasions and their tasks are sometimes of a delicate nature. Nevertheless, they have always worked amicably together, and they are proof, if proof is needed, that Irishmen, Catholic, Protestant and Dissenter, have no difficulty in successfully combining for the good of the nation.
Before I deal with the provisions of this Bill, I should like to say something of its historical background. In October, 1952, and following on a resolution passed by the Commissioners, a committee was set up by the Minister for Justice "to consider the question of the consolidation of the statute law in relation to charitable donations and bequests in Ireland and to make recommendations" to him. The committee consisted of the late Mr. W.E. Glover, former Registrar of Titles and a former Chairman of the Commissioners, Mr. G.F. McCarthy, B.L., formerly Director of the Statute Law Reform and Consolidation Office and Mr. P.P. O'Donoghue, S.C., former Principal Legal Assistant to the Attorney General, with Mr. J.S. Martin, Solicitor, Secretary to the Commissioners, as secretary. Messrs. McCarthy and O'Donoghue are Commissioners. The Committee reported in May, 1953, recommending certain changes in the law and also submitting the draft of a consolidation Bill. The report of the committee was forwarded to the Commissioners for their views. They suggested a number of additional changes in the existing law and, in particular, they were of opinion that the existing statutory provision, providing that a gift of land for charitable purposes is ineffective if made within three months of the donor's death, should not be re-enacted until the advisability of so doing had received the most careful consideration.
In December, 1954, the then Government authorised the Minister for Justice:—
(1) to have a Bill drafted to provide for
(a) the substitution, for the existing common law concept of a charity, of a more satisfactory definition and
(b) the consolidation of the statute law in relation to charities; and
(2) to move for leave to introduce the Bill in Dáil Éireann.
The Charities Bill, 1954, was accordingly introduced in Dáil Éireann and a Bill was prepared incorporating a definition of charitable purposes. In the meantime, the Charitable Donations and Bequests (Amendment) Act, 1955, was enacted in July, 1955. This Act provided for a substantial increase in the cy-près powers of the Commissioners, and allowed them to deal cheaply and expeditiously with a number of cases which might otherwise have involved the legal costs of applications to the High Court.
The definition of "charitable purposes" in the 1954 Bill met with strong opposition. It was pointed out that, as the definition would exclude from rates a number of hitherto rateable properties, the effect on ordinary ratepayers would be serious. "Charitable purposes" has a more restricted meaning in valuation and rating law than it has in income tax and estate duty law. On the revenue side, objection was taken to certain aspects of the definition and also to an amended definition that would not apply for rating purposes.
In view of the difficulties of obtaining a definition more or less acceptable to the various interests involved, the present Government were satisfied that it would be better to drop the idea of a definition in the present Bill. In arriving at this conclusion, the Government took into account the fact that it is obviously preferable to have no definition of a charity rather than a restricted one. Moreover they felt that a better line of approach would be to amend the law so as to get rid of certain existing anomalies concerned with what is and what is not a charity. A committee on charities in the Six Counties—the Newark Committee— which reported in 1959, found themselves "unable to recommend any major change in the legal conception of charity." In England, in a Government White Paper issued in 1955 consequent on the Nathan Report on Charitable Trusts (1952) it is stated:
"3. Therefore, the choice is between leaving things as they are and adopting a new definition which is different in substance. The Government agree with the Committee that there is no reason to change the present content of charity and therefore they do not propose that a fresh statutory definition should be enacted."
One of the problems, which it was hoped in 1954 that a definition of "charitable purposes" could clear up, was that contemplative Orders might possibly be held not to be charitable because of the decision of the British House of Lords in 1949—Gilmour v. Coats—that the Order of Discalced Carmelite Nuns was not charitable. The late Judge Dixon refused to follow this decision in a case decided in the High Court in 1956 in regard to the same order in Ireland, holding that a bequest to the Carmelite Convent, Blackrock, Dublin, was a good charitable bequest. The late Judge Gavan Duffy had already held in 1943 that the Order of Marie Reparatrice, generally called the Order of Perpetual Adoration, was charitable. It is unlikely that Gilmour v. Coats would be followed by the Supreme Court.
I can, of course, only express my own view on this; but I must say that I find it hard to imagine that the reasoning in that case, that contemplative Orders do not confer any public benefit, could be accepted ultimately in this country as sound or valid. Indeed, as the history of gifts for Masses in each country shows, the law of charitable trusts in Ireland has over the years tended to be different from what it has been in England.
Where a religious Order has objects, some of which only are charitable, a gift to the Order simpliciter is not charitable, but this difficulty may be overcome by specifying that the gift is “for the charitable objects” of the particular Order. In a case reported in the Irish Reports for 1935, a gift “for the absolute use of the Jesuit Order in Ireland” was held by a majority of the Supreme Court to be a valid non-charitable gift for the benefit of a class, namely, the individual members of the Irish Province of the Order. Chief Justice Kennedy dissenting, held the gift to be charitable. In 1881, a gift to “the Sisters of Mercy at Bantry” had been upheld by the former Irish Court of Appeal as a bequest to the individual nuns of the community. Unfortunately, however, bequests continue to be drafted in terms which leave their validity, either as charitable bequests or as ordinary bequests, open to doubt, and we are satisfied that something ought to be done by legislation to cover certain of these cases.
We cannot, of course, solve every difficulty but it is, I think, necessary to urge people who intend to make bequests to charity to take some care with the form of the bequest. In fact, it is very, very often the use of elaborate and unnecessary language that leads to unnecessary trouble in the interpretation of the intention of the donor. Again a testator should be clear in his mind as to whether he intends his bequest to be a charitable bequest or a bequest to a particular person absolutely. The traps may be avoided if more care is taken in the drafting and particularly the trap of the rule against perpetuities. In Section 45, it is proposed to validate gifts for purposes some of which are charitable and some not. At present such gifts are usually void for uncertainty. I shall examine Section 45 later.
In July, 1957, the Charities Bill, 1957, was introduced in Dáil Éireann. The Bill is in the same form as the draft 1954 Bill, except that it does not contain a definition of charitable purposes and that it incorporates a number of additional amendments in the law which, in the opinion of the Commissioners and of the Government, are extremely desirable.
I shall now discuss the Bill in some detail. Part I of the Bill is the preliminary and general part. Part II proposes to continue in existence the present Commissioners of Charitable Donations and Bequests (the Board), and it consolidates with amendments the relevant provisions of the Charitable Donations and Bequests (Ireland) Act, 1844 (the 1844 Act), the Charitable Donations and Bequests (Ireland) Act, 1867 (the 1867 Act), and the Charitable Donations and Bequests Act (Ireland), 1871 (the 1871 Act). These Acts are the main Acts dealing with the Commissioners and their powers. As at present, there will be 11 Commissioners, appointed by the Government, but there will be no provision as to their religion. The jurisdiction and powers of the Board are dealt with in Chapter II. The following is a summary of their principal powers which it is proposed to continue:
(1) Power to dispense with the publication of charitable bequests—Section 20;
(2) Power to advise charity trustees—Section 21;
(3) Power to sue for the recovery of charitable gifts—Sections 23 and 24;
(4) Power to institute legal proceedings and certify cases to the Attorney General with a view to his instituting such proceedings—Sections 25 and 26;
(5) Power to frame cy-près schemes —Section 29;
(6) Power to accept gifts for charitable purposes—Section 31;
(7) Power to sell or exchange charity land—Section 34; and
(8) Power to sell and buy rent charges—Sections 35 and 36.
As I have already mentioned, the Charitable Donations and Bequests (Amendment) Act, 1955, considerably increased the cy-près powers of the Commissioners. Prior to that Act, the powers of the Commissioners were limited to cases not exceeding £300 principal or £30 annual sum. In cases over that amount, application had to be made to the High Court. The 1955 Act increased the jurisdiction to cover any gift for the time being consisting of:—
(i) personalty up to £2,000,
(ii) land up to £60 rateable valuation,
(iii) an annual sum up to £100.
Section 29 of the Bill will replace the 1955 Act and, as suggested by the Commissioners, it is proposed to give the Board cy-près powers for any gift up to £5,000 in value, the value of land to be reckoned at fifty times the rateable valuation, the value of any rent charge at fifteen times the annual amount thereof, and the value of any ordinary periodical payment at twenty times the annual amount thereof.
The new provision will allow the Board, first, to revoke an existing cyprès scheme, whether made by the Commissioners or by the court, that is found unlawful or impracticable, and, secondly, to substitute a new cy-près scheme in its place. I shall give an example of the circumstances in which it is necessary to have a cy-près scheme made. If, say, a person leaves by will money for the building of a church in a particular district and on his death, it is found that such a church has already been built, the money will be applied cy-près for the repair and upkeep of the church. The expression cy-près comes from the French, and although its exact original meaning is doubtful, it has now, by professional usage, come to mean “as near (as possible)”.
As well as the existing powers of the Board, Part II of the Bill proposes certain additional powers to which I wish to draw attention. The sections concerned are Sections 6, 30, 32, 38 and 44.
Section 6 provides that the Board shall have and be deemed always to have had power to acquire, hold and dispose of land. The power of the Commissioners in regard to land itself is doubtful, although they are specifically entitled to own a rent-charge. They already hold land which came to them under the 1844 Act from an old Board of Commissioners, established in 1800, which ceased to function in 1844. By the way, there is an overlap between Section 5 and Section 6 in the matter of holding land, but this can be cured by amendment later.
Section 30 will allow the Commissioners to alter schemes under the Educational Endowments (Ireland) Act, 1885. This Act established a Commission of five members who were given wide powers of drafting schemes for the future management of educational endowments. These schemes were to supersede all existing statutes, trusts, etc., in regard to the endowments. The power of the Commission to draft schemes expired in 1897, but the 1885 Act, in Section 18, enacted that the Commission might provide for the alteration of a scheme from time to time by the Commissioners of Charitable Donations and Bequests, upon application by the governing body or any party interested, and I quote: "provided such alteration shall not be contrary to anything contained in this Act".
There is serious doubt as to the Commissioners' powers to amend these educational endowment schemes. An example of the type of alteration needed in a scheme is where the governors, owing to lack of pupils, desire permission to dispose of the school premises and apply the endowment moneys towards the grant of scholarships to other schools.
Section 30 proposes specifically to authorise the Commissioners of Charitable Donations and Bequests to make any alterations in a scheme, framed and approved under the 1885 Act, at the request of the responsible person of persons, provided that any alterations so made are in furtherance of education; and any such alterations shall be deemed not to be contrary to anything contained in the 1885 Act. The section makes appropriate provision for the giving of public notice of any proposed alterations other than those of a minor or formal nature.
Section 32 proposes to allow the Board to invest charity funds under their control in securities not authorised by law or not authorised by the trust instrument, and to permit ordinary charity trustees to do likewise. At present, under Section 12 of the 1867 Act, where securities are held on trust, after the determination of or subject to a prior life or other limited interest, for charitable purposes, the trustees may, if the Commissioners do not object, vary, alter or transpose the securities; and, if the Commissioners object, the trustees may apply to the High Court to carry out their proposal. The object of Section 12 of the 1867 Act seems to have been to prevent trustees adversely affecting the interests of the life tenant, and this object is now enshrined in Section 33 of the Bill, which will re-enact the existing law. It is proposed in Section 32 to make similar provision for charity funds not subject to a life or other limited interest.
Subsection (3) of Section 32 confines investment of charity funds by, or with the approval of, the Commissioners or the Court to such investments as are (1) authorised by the trust instrument or under the Trustee (Authorised Investments) Act, 1958, or (2) investments in Irish securities, such securities being (a) stocks or shares, the ordinary shares being quoted on the Dublin or Cork Stock Exchange, in any industrial or commercial company incorporated in the State, or maintaining in the State a register of its shareholders resident in the State, or (b) freehold or leasehold land in the State. There is a saving for investments expressly forbidden by the trust instrument. The proposed amendment of the law is in line with Government policy as enshrined in the 1958 Act, and also with the policy adopted by the Minister for Finance in connection with the Private Bill dealing with the Iveagh Trust, and now before the Oireachtas.
Section 38 of the Bill is necessary because of a doubt as to whether under the existing law—Section 14 of the 1867 Act—the Commissioners may direct the trustees of a charity, whom they may authorise to sell, exchange or lease the charity land, to pay the moneys arising from the transaction to the Commissioners, so that they may be invested by the Commissioners for the benefit of the charity. The Commissioners have power to give directions for the due investment of the moneys, but they consider that it should be made clear that in an appropriate case they shall also have power to invest the moneys themselves for the benefit of the charity.
Section 44 proposes to give the Board power to order the taxation by one of the High Court Taxing Masters of a bill of costs claimed by a solicitor in respect of business conducted on behalf of a charity or charity trustees. The Board have not got this power at present but have suggested that, in the interests of charitable trusts, they should have it. The English Charity Commissioners have had a similar statutory power since 1855.
Part III of the Bill—Sections 45 to 54—contains certain miscellaneous provisions in regard to charities. With the exception of Sections 45, 46 and 54, this Part simply proposes the re-enactment of existing statutory provisions.
I have already mentioned Section 45, and I shall now examine it at some length. The section is concerned with imperfect trusts. These are trusts which at present fail because the objects include both charitable and non-charitable objects. A usual type of case is where property is given for a charitable purpose linked disjunctively with a non-charitable purpose, such as "for charitable or benevolent purposes". The inclusion of secondary objects which are not charitable, or the use, even in association with the word "charitable", of words such as "public" or "benevolent", in the form "charitable or public" or "charitable or benevolent", will prevent the trust from being a charitable trust, and the trust becomes completely void.
The Scottish courts have taken a different and more sensible view than the courts in England and Ireland. In Scotland, a conjunction of the words "charitable" and "benevolent" does not impair the peculiar virtues of the word "charitable" and in a case in 1947 one of the Scottish judges simply treated the words as synonymous. This problem was raised in an acute form in England by reason of three leading cases decided by the British Courts in the 1940s. These were the Diplock (No. 1), the Oxford Group and the Ellis cases.
In Diplock, a case in 1944, a testator left the residue of his estate— more than £250,000—"for such charitable or benevolent object or objects" in England as his trustees and executors should in their absolute discretion select. It was held, following a number of previous decisions, that, "benevolent" being wider than "charitable", the executors were entitled to apply the fund outside the sphere of charity. The bequest was not entitled to the privilege, enjoyed only by charities, of exemption from the rule that the objects of a trust must be precisely defined. It was, therefore, void for uncertainty.
In Oxford Group, a case in 1949, it was held that the Oxford Group, a registered limited company, was not entitled to exemption from income tax as a body established for charitable purposes only, because certain of its subsidiary objects were not strictly charitable.
In Ellis—also a 1949 case—land was conveyed to trustees on trust to permit the erection of buildings suitable for a Catholic Church or Catholic school, or for use “generally in such manner for the promotion and aiding of the work of the Roman Catholic Church in the district... as the trustees with the consent of the Bishop may prescribe”. It was held that the words I have quoted enlarged the scope of the trust beyond exclusively charitable purposes, and, accordingly, that the trustees could not successfully claim exemption from tax.
Trusts similar to those concerned in Oxford Group and Ellis had, before these cases were decided, been generally considered to be valid charitable trusts. The British Nathan Committee, which reported in 1952, recommended that such trusts should be validated provided the trust instruments were in existence on December 31st, 1950, and provided they passed certain tests. The Committee could not reach a unanimous conclusion on the question of validating future imperfect trust instruments and concluded that the existing law should apply to such instruments.
In 1954, the British Parliament enacted the Charitable Trusts (Validation) Act, 1954, and a similar Act was enacted in the Six Counties in the same year. The 1954 Act provides that any imperfect trust provision contained in an instrument taking effect before 16th December, 1952, the date on which the British Government policy on the matter was announced, shall have, and be deemed to have had, effect—
(a) as respects the period before the commencement of the Act, as if the whole of the declared objects were charitable; and
(b) as respects the period after that commencement as if the provision had required the property to be held or applied for the declared objects in so far only as they authorise use for charitable purposes.
The matter came up for review again in the Six Counties when the Newark Committee was considering the law of charities. Despite the Nathan Committee's conclusion that future imperfect trust instruments should not be provided for by legislation, Professor Newark's Committee recommended that existing legislation in Australia— Victoria and New South Wales—and New Zealand should be followed, and that no trust shall be held to be invalid by reason that some non-charitable and invalid purpose as well as some charitable purpose is, or could be deemed to be, included in the purposes to which the trust fund might be applied. This recommendation is, however, subject to the proviso — not found in Australian or new Zealand legislation —that the court shall have power to approve the application of some part, or the whole, of the funds to the charitable purposes.
Section 45 of the Bill is modelled on the Australian and New Zealand legislation but it is so drafted as to ensure, as far as possible, that it will be reasonably and liberally interpreted. In Victoria and New Zealand, the tendency has been for the courts to construe the relevant legislation narrowly. In a case in New Zealand, in 1950, it was held that a gift "to the trustees of the Church of Christ, Wanganui, to help in any good work" did not come within the relevant statutory provision on the ground that the provision applies only to cases where the creator of the trust had provided a means of severance, where, for instance, by using the word "benevolent" he allows the court to omit that word or strike it out and thus to employ what is called the blue-pencil technique.
This decision has been severely criticised as being a far too narrow interpretation in that it prevents the validation of trusts—which have obviously charitable purposes but which include non-charitable purposes by implication—merely because the charitable and non-charitable objects are not mentioned separately or because a testator has not used a word which, by itself, would be upheld as charitable so as to allow the trust to be severed.
Last year, the New South Wales section was the subject of an appeal to the Judical Committee of the British Privy Council. The Committee in a liberal and reasonable interpretation of the section held that it applied not only where a testator had expressly indicated alternative purposes, the one charitable and the other non-charitable or not necessarily charitable, but applied also where the gift was for a purpose, described in a composite expression, embracing both charitable and non-charitable purposes. The section would, in the opinion of the Committee, apply where the gift was for an object so predominantly charitable— such as an order of nuns—that a charitable intention on the part of the testator could fairly be assumed, or for, say, benevolent purposes, which connoted charitable as well as non-charitable purposes.
The Government do not favour the Newark Committee recommendation that the court should be allowed to sever a mixed trust so as to empower the court to apply the whole or part of the funds to charitable purposes. The recommendation suffers from the defect that there are no principles to guide the Court as to when or how it should sever. The Newark Committee were conscious of this defect but pointed out that the instrument creating the trust would be before the court and much may—and I emphasise "may"—they said, depend on the exact terms of the instrument. However, leaving the matter to the Court can only make for uncertainty and also for expense in ascertaining the intentions of a donor or testator.
The object of any change in the law should be to validate for charity what was obviously intended to be for charitable purposes in the popular sense of that expression. Allowing the court to sever could benefit relatives whom a testator had no intention of benefiting or for whom he had otherwise amply provided in his will. In favour of the Australian and New Zealand legislation is the fact that, though the solution does not take account of the testator's intention—in so far as that intention can be ascertained at all in such cases—there is a greater benefit to the public at large.
Section 45 of the Bill will mean that the courts will no longer find themselves in the unhappy position of feeling compelled to invalidate what were obviously intended to be charitable bequests purely on the ground that proper technical words were not used by a philanthropic donor or testator. In Ireland, a number of cases have come before the courts involving trusts with mixed charitable and non-charitable objects and they all illustrate the rule that where a trustee has an absolute power of selection between the objects the gift will fail. This rule was cited with approval in the decision of the Supreme Court in the 1935 case to which I referred at the beginning of my speech. The extraordinary result of the rule has been well illustrated by the former English Lord Chief Justice when he said in the Court of Appeal, Diplock's Case:—
"For myself, owing perhaps to the fact that I was not brought up in this branch of the law, I cannot feel any enthusiasm for this rule. Indeed, when I find a rule which says that if property is left to trustees to give to charitable and benevolent purposes, that is good, but if it is for charitable or benevolent purposes, it is not, I regard it with some distaste. That was described by the Master of the Rolls in the recent case of In re Horrocks as a trap into which the unskilled draughtsman not infrequently falls. For myself I cannot have any doubt that the draughtsman in this case fell into a trap, because it is obvious that Mr. Diplock's intention was to leave the money to charity in the popular sense of the term, and had it been pointed out to him when he said: ‘I want to leave it to charitable or benevolent objects,’“well, if you use those words the money will not go to charity but to your first cousins once removed” (of whose existence he himself probably did not know) then, provided Mr. Diplock was of sound mind and memory and understanding, there is not the least doubt in the world that he would have said: “Cut out the word ‘benevolent’.” The fact that I do not regard this rule with the respect that one should ever pay to long existing rules is neither here nor there, and the cases oblige me to hold that this gift is void.”
Mixed trusts may fail because either (1) the testator has left the choice of objects to his executors or trustees or (2) the non-charitable objects of his bounty are not ascertained or ascertainable. Except in the case of a charitable bequest, a man must make his own will: he cannot leave it to his executors or trustees or to the court to make it for him. In the case of a charity, provided that there is a clear charitable intent even though the testator does not use the word ‘charity,' it does not matter if the objects are not particularly defined; and the general charitable intention will be carried into effect by means of a scheme framed by the court or by the Commissioners of Charitable Donations and Bequests. A charitable trust will be executed for a testator on the basis that there is a legal conception of what is charitable; but a so-called benevolent trust is too vague and there is no legal conception of what is benevolent.
Moreover, the State, in the person of the Attorney General, as parens patriae taking all charities under its protection, is in a position to enforce a charitable trust. If there be no specified charitable beneficiary who can come to the court to have the trust performed, the Attorney General may appear and is entitled to insist on the trust being carried out by a scheme cy-prés. It is only where the trustees have a discretion to apply the trust fund to a charitable purpose or to a non-charitable and indefinite purpose—so that they may apply it to one purpose to the exclusion of the other—that the trust will fail.
In the leading case on the subject in 1804, the matter was put as follows:
"The question is not whether the trustee may not apply it upon purposes strictly charitable, but whether he is bound so to apply it."
It is at this type of case that Section 45 of the Bill is aimed. Where the trustees have a discretion to apportion between charitable objects and non-charitable objects—whether definite and ascertainable or not—the trust will not fail if there is a clear intention to devote some part of the fund to the charitable objects to that the executor is not free to apply the fund to one purpose to the exclusion of the other or others.
If the trustees do not apportion, the Court will apportion and, if it appears impractical to fix the proportions, the fund will be apportioned equally. However, if it is found that the bequest is void or illegal in so far as the share apportioned to a non-charitable object is concerned because, for example, the object is indefinite or a gift to it offends the rule against perpetuities, the part apportioned to that object will go to the next-of-kin as on an intestacy.
It should be noted that where there is a general overriding trust for charitable purposes, the trust is good, though some of the particular purposes to which the fund may be applied are not strictly charitable or though one of two alternative modes of application is invalid. In such cases, the court will give effect to the general charitable trust but the trustees are restricted from applying the fund to the purposes or in the manner which, are objectionable. Section 45 of the Bill will not affect these cases nor will it affect cases where there is at present apportionment; but, it will affect cases where there is a choice left to the trustees such as cases of gifts for "charitable or benevolent" purposes.
A gift for a "charitable and benevolent” purpose is a good charitable gift under the present law because “benevolent” is read conjunctively, as meaning both benevolent and charitable, so that the gift is one to such benevolent objects as are charitable or such charitable objects as are benevolent, charity in either way predominating. It should be pointed out that the use of “and” instead of “or” is not conclusive in every case. Where a complex form of words is used such as “benevolent, charitable and religious” the gift may be void. It depends on the language and the intention of the donor whether the word “and” or “or” is to be read conjunctively or disjunctively, which comes back to the suggestion I made earlier that donors and testators should eschew the use of elaborate language.
As well as the "charitable or benevolent” case, Section 45 will cover the gift to a religious Order simpliciter or a gift “for the purposes of a religious Order”. The section will validate as charitable such gifts in any case where it might be held that the purposes of the Order are mixed purposes, some charitable and some not. The law as to these orders is not free from doubt; and I am not to be taken as saying that a gift to a particular religious Order or for the purposes of a particular Order is not a valid charitable gift. That is a matter for the Supreme Court to determine in respect of the particular Order. Nevertheless, the Bill saves the courts the trouble of having to decide future cases where the purposes of a religious Order might be held to be mixed purposes, some charitable and some non-charitable, and where there is not what I have called an overriding trust for charitable purposes.
Subsection (2) of Section 45 proposes that subsection (1) shall not apply in the case of any instrument taking effect before 1st January of this year, or in the case of an instrument, the terms of which provide for apportionment between the charitable and the non-charitable objects. I have already explained the apportionment cases. In these cases there is no criticism of the existing law, and we do not propose to interfere with what is a perfectly valid bequest to a charitable object and also to a non-charitable object. The law is settled in this type of case and no particular difficulty arises.
As regards the limitation of Section 45 to instruments taking effect on or after 1st January of this year, I should like to say that this aspect was carefully considered by the Government. In fixing a particular date, account had to be taken of the rights of next-of-kin. Where an imperfect trust provision in a testamentary gift causes the gift to fail completely, the property goes in the ordinary way to the next-of-kin or residuary legatee. Where the imperfect trust provision causes the gift to fail as a charitable gift, but as an ordinary gift, the beneficiary has to pay succession or legacy duty.
A charitable devise or bequest, in so far as the property is applicable for charitable purposes in Ireland, that is, the whole 32 Counties, escapes legacy and succession duty. However, the gift is liable to estate duty. If the property is real estate, the estate duty is a charge on the gift itself. If the property is personalty, the estate duty is a testamentary expense payable out of the residuary estate. It is, of course, always possible for a testator to provide that estate duty on real estate shall be paid out of the residuary estate.
Subsection (3) of Section 45 is designed to cover a case where a tax or duty has already been paid to the Revenue Commissioners between 1st January last and the date this Bill was circulated. The tax or duty will not be liable to be repaid. Furthermore, anything done or any determination made during that period, in connection with the administration of property comprised in any gift coming within the section, will not be invalidated. The idea is not to upset or interfere with things properly done under existing law in respect of a particular gift coming within the section. In so far as possible, we must avoid tampering with rights lawfully acquired.
Section 46 is designed to save for charity a gift for a grave, tomb or memorial. It proposes that such a gift shall be deemed to be charitable, provided it does not exceed, in the case of income, £60 a year and, in the case of capital, £1,000. Under existing law, gifts for the upkeep of a grave, tomb or memorial inside a church are charitable as being connected with the fabric of the church, and thus as being for the advancement of religion. However, gifts for graves, vaults or tombs outside a church are not charitable, and, if they provide for perpetual upkeep, they will be void as offending the rule against perpetuities, that is to say, the rule that nobody may tie up his property indefinitely—the permitted period being that of a life or lives in being and 21 years thereafter.
Charitable trusts are exempt from this rule. In the case of non-charitable trusts for the upkeep of graves or tombs, it would appear—although the law is not free from doubt—that, if the capital is not tied so that both the income and the capital may be used within the 21 years or, if there is no provision as to income, so that the capital may be used within the 21 years, the trust will be a valid trust; but it will be subject to taxation, such as legacy duty and income tax, from which charitable trusts are exempt.
We can see no real reason for distinguishing between a gift to keep in repair a grave in a church and a gift to keep in repair a grave in the ground around a church or in a graveyard elsewhere. Section 46 will succeed in giving practical effect to what has been described as one of the oldest sentiments of the human race, namely, the feeling widely and deeply held that one's last resting place should be decently marked and suitably maintained.
Similar proposals to that contained in the section were made, in England, in the Fourth Report (1956) of the Lord Chancellor's Committee on the Rule against Perpetuities and, in the Six Counties, in the Report (1958) of the Newark Charity Committee. In the English Report, the proposal is to validate gifts for graves as ordinary gifts, though not as charitable gifts.
Section 54, which was inserted in the Bill at the suggestion of the Glover Committee, following recommendations by successive local government auditors, authorises the Commissioners to pay into their general account, out of the income of the Embezzled Charity Recovery Fund, the sum of £17 13s. 5d., being the amount of a deficit which has appeared in their annual accounts since 1873. It is not known how this deficit originated, but the Commissioners consider it desirable to clear it off their accounts. I doubt if there can be any objection to this. The Embezzled Charity Fund is an old fund handed down to the present Commissioners to provide for the recovery of embezzled charities. It is now used as a grant-in-aid for the Vote of the Office of the Commissioners.
Finally, I come to the Schedule to the Bill, which lists for repeal a number of enactments dealing with charities. In the main, the repeal of these enactments is consequential on the provisions of the Bill. However, I desire to draw the attention of the House to certain of the provisions of the 1844 Act which are being repealed, but which are not being repeated in the Bill. These provisions are Sections 15, 16, 17 and 18 of that Act. I shall discuss Section 16 in a moment. Sections 15, 17 and 18 impose certain disabilities on Catholics and Catholic religious Orders, in so far as charitable bequests are concerned. In the opinion of the Glover Committee, these provisions were repealed by the Government of Ireland Act, 1920, and by the Constitution. "If they are not," said the Committee, "they ought to be." We entirely agree.
Section 16 of the 1844 Act provides that a gift of land for charitable purposes is ineffective if made within three months of the donor's death. The section was referred to by the Commissioners in their observations on the Glover Committee Report, and they recommended that it should not be re-enacted until the advisability of doing so had received the most careful consideration. The Government are satisfied that the section should be repealed and not re-enacted. It was originally designed to prevent improvident gifts by those who knew they were about to die. It is peculiar to Ireland, and has led to an amount of difficulty.
A decision in 1865 that the section also invalidates gifts of money arising from the proceeds of land has been followed over the years. It was specifically approved of by the Supreme Court in the 1935 case I have previously mentioned, although it was argued on behalf of the Attorney General in that case that the decision was erroneous in principle. The position in regard to the Section has become absurd by reason of the fact that a well-recognised conveyancing device—the so-called "O'Hagan clause"—allows any properly advised donor to defeat the section.
In the foreword to Dr. Vincent Delany's recent work on the law of charities in Ireland, Mr. Justice Kingsmill Moore, who is a Commissioner, said that "no living man can justify the retention of Section 16 of the 1844 Act". We are aware that there are solid arguments for restricting the disposal of his property by a testator at the expense of close relatives, and this whether or not the disposal is made in fear of death. However, we cannot see any reason for a law which allows a person, whose property consists of stocks and shares, to give it all to charity at any time before death, but which does not allow a person to give land or the proceeds thereof to charity, if the donation, devise or bequest is made within the arbitrary period of three months prior to his death.
The Newark Committee in the Six Counties has recommended the repeal of Section 16 of the 1844 Act. It has already been repealed there in its application to hospitals. The section in the 1844 Act was based on a more comprehensive and restrictive provision in an old Act of 1736, which applied to England but not to Scotland and which was repealed in 1888.
Under the English Mortmain and Charitable Uses Act, 1891, which did not apply to Scotland or Ireland, land willed to a charity must be sold, unless it is required for actual occupation for the purposes of the charity and not as an investment; but there is no restriction in England on willing land to a charity. In the English Charities Act, 1960, enacted in July of this year, the 1891 Act has been repealed as well as all other statutory provisions dealing with mortmain. The statutory provisions governing mortmain in this country were repealed by the Mortmain (Repeal of Enactments) Act, 1954.
I am afraid I found it necessary to speak at some length on this Bill. It is in many respects a highly technical measure, and I trust I have, in what I have said, gone some way to clarify its complexities. The law of charities is by no means an easy subject. For this reason, I have had to explain in more detail than would normally be necessary certain of the changes the Bill proposes to make. Reform of the law generally requires an explanation of its history and background in order to appreciate and, if necessary, to criticise what is proposed.
In preparing this Bill, the Charity Commissioners, who have, of course, a long and valuable experience in the field, have been of considerable assistance, and I should like to take this opportunity to thank them, and their secretary, for their help. Dr. Vincent Delany, of the Law School of the Queens University of Belfast, also helped us. Dr. Delany, who is a well recognised authority on the law of charities, was a member of Professor Newark's Committee in Belfast. His views on various aspects of the existing law were always readily available to us. We are greatly indebted to him.
Since this Bill was published, the Commissioners have made some further suggestions for the amendment of the law. They are, at present, considering the cy-près doctrine, and we hope to have definitive proposals from them in the near future. Cy-près, like other aspects of charity law, is rather technical, and I do not propose to go into it in any detail on this Stage.
I recommed the Bill to the House. I hope that the explanatory side-notes have been helpful to Deputies in following the provisions of the Bill.
