Vol. 266 No. 8
I move amendment No. 1 :
In subsection (1), page 3. line 8, before "vest" to insert "on the trusts which apply to the charity,".
This is a drafting amendment and the purpose of it is to make quite clear that the vesting of charity property in a body corporate established under section 2 shall be under trusts which apply to the charity. This amendment arises from comments made during the Committee Stage of the Bill in the Seanad.
I move amendment No. 2:
In subsection (3) (b), page 3, line 32, before "incurred" to insert "duly".
This again is a drafting amendment and the object is to ensure that on the framing of the scheme of incorporation under section 2 the only debts and liabilities incurred by the trustees which will be automatically transferred to the body corporate are those properly incurred. This amendment also arises from comments made during the Committee Stage in the Seanad. What I have said on this amendment applies to the following amendment, amendment No. 3.
I have no objection to these amendments, but it occurs to me that they are scarcely necessary. Possibly they make something which is already very clear a bit clearer.
I would be inclined to agree with the Deputy. However, there should be no doubt at all as a result of these amendments.
I move amendment No. 3:
In subsection (3) (b), page 3, line 37, before "incurred" to insert "so".
I move amendment No. 4:
In subsection (3) (d), page 3, line 48, to delete "prosecution or other legal proceeding" and substitute "or other legal proceeding, other than proceedings for an alleged offence or proceedings in relation to an alleged breach of trust,".
This is another drafting amendment. The purpose of it is to ensure that on the framing of a scheme of incorporation under section 2 the automatic substitution of the body corporate for the trustees will not affect pending proceedings against the trustees where such proceedings are for a breach of trust or a criminal offence. In the case of all other proceedings the body corporate will take the place of the trustees. Again, this amendment arises from comments made during the Committee Stage in the Seanad.
I would like to inquire whether this has any effect in relation to alleged offences or alleged breaches of trust alleged to be committed subsequent to incorporation.
No. This would deal only with offences alleged to have been committed before incorporation. There is a later amendment—I think it is the next one-which deals with the personal liability of members of a body corporate for acts done by them after the incorporation of the trust. This deals only with pre-corporation offences or breaches of trust.
Would the position not be that any individual who was alleged to have committed an offence would be chargeable with that offence anyway, irrespective of the subsection?
If the offence was in relation to a particular trust or charity, and it was a criminal offence, he would be personally liable as would any person be liable for a breach of the criminal law. The section as originally drafted set out that any proceedings against the trustees would carry over against the members of the incorporated body and I do not think this amendment changes that position. All it does is make quite clear what it intended.
I move amendment No. 5:
In page 3, between lines 55 and 56, to insert the following subsection:
"(4) Every member of a body incorporated by virtue of a scheme under section 2 shall, notwithstanding the incorporation,
(a) be chargeable for property coming into his hands as such a member, and
(b) as regards the charity to which the scheme relates, be accountable and liable for his own acts or omissions and for the due administration of the charity and its property,
in the same manner as if the scheme had not been framed and he had been duly appointed to be a trustee of the charity."
The purpose of this amendment is to remove doubts as to the liability of members of a body corporate established under section 2 for their acts, omissions, et cetera, in relation to the charity property. The amendment will ensure that persons appointed members of the body corporate will be liable in the same manner as if they had been appointed trustees of the charity. This is the amendment which catches what the Deputy had in mind on an earlier amendment.
It does but, on reading the amendment, it struck me I should ask the Minister for a definition of membership of a body incorporated by virtue of a scheme under section 2. There is a distinction here which this amendment may possibly gloss over. As I understand it, the intention of section 2 is to incorporate an existing charity. The charity exists in so far as its trustees are the legal entity for the charity. If one incorporates that legal entity it no longer has members in the sense that a company, which is incorporated in a different way, has members who are shareholders. There is a clear distinction between the incorporation of a company and the incorporation of a charity under section 2 and, for that reason, I am wondering if this proposed subsection is, in fact, of any real value. It could, indeed, do more harm than good the way it is because a potential defendant in a criminal charge or in relation to a breach of trust could plead, possibly successfully, that he is not a member of a body incorporated under section 2, there being no such thing as a member of such a body, section 2 incorporation being simply the incorporation of a charity rather than the formation of a company.
It appears to me that when a charity has been incorporated the previous trustees will be the persons constituting the incorporated body. You will, if you like, have a corporation following the making of the scheme under section 2 and that will have a legal life of its own. It will have to be composed of persons who manage its affairs in the same way as directors of a company manage the affairs of the company and, by analogy, the persons managing the affairs of the incorporated charity will be liable in precisely the same way as would the directors of a company be liable for malfeasance that might be committed by them. What this amendment wants to make quite clear is that these persons will be personally liable for any acts that might be done by them and in the same way as if they had not been incorporated. The idea of incorporation is to provide perpetual succession to avoid the difficulty and expense that may attend the necessity of having to appoint new trustees and to vest the trust property in the new trustees. The essential liability of the trustees will not be disturbed. That will remain notwithstanding the charity becoming a corporation.
The point on section 2, as I understand it, and as I intended when I introduced it, was to get over the difficulty of having to appoint new trustees at fairly regular periods. The purpose of incorporation under section 2 was to avoid that by incorporating statutorily under the section an existing charity. The benefit of incorporation only accrues to the charity when the existing trustees are dead and, under section 2, it would no longer be necessary on the death of the last surviving trustee for his executors to appoint a new trustee.
This amendment reads:
Every member of a body incorporated by virtue of a scheme . . .
My suggestion to the Minister is that this terminology is not well chosen for the reason that after the death of the existing trustees there will be no members in the sense that the Minister is, I think, suggesting now. To try to make the distinction clear I have sought to distinguish between an incorporation of a body of persons under the Companies Act and a statutory once-and-for-all incorporation of an entity known as a charity under section 2 of this Bill.
The position described by the Deputy could not arise. What the Deputy is suggesting is that when all the trustees would die out there would then be no persons at the helm of this incorporated charity. That position cannot be. There will have to be procedural machinery for appointing trustees from time to time but this will be different from the present necessity where not merely is the appointment of trustees involved but there is also the conveyancing problem of vesting the trust property in the new trustees. In the new procedure, by virtue of incorporation, new directors, if I may call them that, can at any time be appointed by what I consider will be the body analogous to the general body of shareholders, that is the board. They can appoint new persons. You could, I suppose, have a situation where there might be no trustees but the charity would be a live, legal entity. There would be persons appointed to do the day-to-day administration of the charity. What is intended here is to make sure that the people who are in charge from time to time of the company will be liable for all property that comes to their hands.
I see the point the Minister is making and I accept it in so far as he has explained it and I think he has explained it well. It disappoints me a bit that it will, notwithstanding section 2, be necessary to appoint new trustees but the major problem of the conveyance will be avoided. I should like to draw the Minister's attention again to the actual words used at the beginning of this amendment which says:
Every member of a body incorporated by virtue of a scheme . . .
The Minister should define "member" there because "member" seems to imply, as he says himself, either one of the original trustees or someone very much akin to them. In a charity you would normally have perhaps three trustees in whom the charity funds are vested but you might have an executive committee which would consist of 20 or more people working on behalf of the charity. Under the explanation which the Minister has given, which is perfectly valid so far as it goes, we would then have the situation that all the original trustees at the time of incorporation would certainly be regarded as members but that after their death any member of the executive committee, which could be very substantial, could come under this amendment and that is something that may not be intended. It may be too wide. For that reason there is need for a definition of the word "member" as used in this amendment.
The Deputy has raised a point but it is essential to remember that the word "member" is specific so far as corporate law is concerned. That only means a full shareholder or somebody in that capacity. The purpose of this section, as I would read it, is that there might be an argument made at some later stage whereby the fact that the members were appointed by the board might be a release of those members if anything went wrong. The purpose of this section is to spell out specifically the liability of the member having been placed in that position. It is essential to get over that possible argument being raised in the future and I can see it being raised and causing difficulty. The member in this case is the trustee or the replacement trustee. This will be done by a simple procedure as is done by some charities at present that are run by way of a company. The purpose is to spell out that this member, once appointed, is personally liable, that he is really in the position of a trustee and stays as such and, I think, reading that section, that his personal assets could be followed if he defaulted in something or other. The Deputy mentioned a lower committee or executive committee. That would be purely on an administrative basis because the member of this body will be in the same position as a trustee and, as we know, to use an old legal tag, delegatus non potest delegare, in a situation like this and that is a very strong principle in the law in this country as distinct from England where trustees can delegate. I can assure the Deputy that I was acting as a trustee in an estate which was both here and in England and I was advised that I was entitled to delegate. A High Court judge in England became very annoyed that I had delegated because I was in the position of a trustee and held that I was a trustee under Irish law and therefore I could not delegate. So far as a lesser committee or executive committee is concerned, it would be purely at an administrative level. The members will be responsible all the way through, taking the law as it stands at the moment.
What concerned Deputy O'Malley as well was the question of who would be the members. Basic to this whole change is that the board, that is the commissioners, will frame a scheme for each charity that desires to be incorporated and that scheme will set out who the members of it are. It will also say how new members are to be appointed. To say who will be the members at a particular time is not something that can be legislated for in advance. That is something that will depend on the terms of the scheme. I presume a prototype scheme will be drawn up which will be more or less available and will be applicable in the case of most charities that wish to be incorporated. I am advised that in Northern Ireland there is power like this and the precedent scheme which I have seen sets out that : "Trustees for the time being of the charity shall form the corporation by the name of such-and such", so it is envisaged that the trustees for the time being are appointed under the scheme and they then would be the members and would have the liability which this new subsection would impose on them.
Does the Northern Ireland precedent scheme set out how subsequent members will be appointed?
It does. It sets out that the members may themselves appoint further members to their board.
I accept the great bulk of what the Minister and Deputy Esmonde have said but it is, I think, normal practice with charities to have the actual trustees, legally speaking those in whom the property is vested, as rather inactive and often older members of the organisation and the executive functions and both day-to-day and long-term policy are carried out by members of the executive or the committee rather than the trustees themselves. That I think is the general practice. It may not be true of all charities but it is true of many of them.
The Minister may run into a difficulty in that there will have to be a re-think by charities in relation to that sort of practice up to now. The older and less active people will have to cease to be members within the meaning of this subsection. The more active people will now have to become members. Subject to that I am reasonably satisfied with what the Minister has said.
On that point it might clear the matter for the Deputy if I inform him that it will be for the commissioners in making a scheme in any particular case, to say how many of the existing trustees of the charity who seek to be incorporated will be appointed as members of the new incorporated body. It could happen in a case, as the Deputy says, that there will be trustees with legal standing and with a volunteer committee assisting them. In that case when the charity would come to be incorporated, and the scheme would come to be prepared, the board would have to look at the whole picture and see where the liability is going to be placed and who are to be made members of the new incorporated body. Under the Charities Act, 1961, in the definition section, it is laid down that references to the trustee of a charity shall be construed as including reference to a person acting in the administration or management of a charity. It would seem from the law, as it stands, that people who are not strictly trustees but who are present in an executive capacity have all the liability of trustees. In that regard there will be no change.
I think that paragraphs (c) and (d) of section 3 (3) also have what the Deputy is referring to.
There is one point I should like to make in relation to the section as a whole and to section 2. Where, on Incorporation Schemes having been made under section 2 and with the further provisions as to such schemes under section 3 as to the vesting of the property, will the Minister give the House an assurance —I would prefer if it was written into the section—that no more stamp duty would be payable than is payable at the moment on the appointment of new trustees? That stamp duty is limited, it is not ad valorem, it is 50p irrespective of the value of the property.
I imagine that the intention was, and my own intention was, that no more stamp duty would become payable. On reading the section as a whole it goes, as the Minister will appreciate, somewhat beyond simply appointing new trustees. It is conceivable that Revenue would seek to recover duty on an ad valorem basis. For that reason the thought struck me, when I was in the Seanad. whether a further subsection should be added to make it clear that no duty greater than the existing duty would be chargeable and there would be no question of an ad valorem duty chargeable on instruments under section 3.
There will be no instruments involved in the changeover in this case. The vesting of the property in the incorporated body will be by virtue of section 2 and it will be automatic by virtue of that section. No instruments of transfer will be involved. In the absence of instruments of transfer there will be no document which could be liable to stamp duty. If Revenue were to look for stamp duty consequent on this section they would have to bring in legislation to catch the transfers which will automatically follow by virtue of section 3.
If the Minister looks at subsection (2) he will see that there is provision for what the Land Registry have to accept as evidence. That consists of a copy under the seal of the board, or the commissioners, of the scheme. I can recall having a lengthy argument with Senator Alexis FitzGerald in the Seanad on this point. While the problem is not great in relation to the Land Registry because the registrar will clearly accept, without demur, the seal of the board, there could be a different situation in relation to unregistered land.
One can clearly see a requisition being properly made on the sale of such lands and that the certified copy of the seal, under section 2, should be stamped either ad valorem or fixed and, possibly, that such an order should be registered in the Registry of Deeds. Senator Alexis FitzGerald argued that point, or similar points, at some length and I was not 100 per cent satisfied that he was wrong. I feel it is my duty for that reason to put forward similar points now to the Minister, in the changed circumstances.
Of course if one gets a pernickety conveyancer he can raise anything he likes on requisition and goodness knows what consequences would follow. In regard to property that is registered in the Registry of Deeds the only thing that would concern a purchaser of charity property, owned by an incorporated charity under a scheme made under section 2, would be to see how it came to be transferred to the incorporated charity from the old charitable trust. He is referred then to section 3 which provides for automatic vesting in the new incorporated charity and there cannot be any question, consequently, of having to register the scheme as such in the Registry of Deeds.
In the case of the Land Registry what will be required there is necessary because of the Land Registry regulations as to the transfer of ownership. It will be necessary to notify the Land Registry that the unincorporated charity has been turned into an incorporated charity for the amending of their records. It will not be an instrument transferring or conveying the property. The legal conveyance takes place by virtue of section 3 and not by virtue of any instrument of any kind. Any noting that has to be done in the Land Registry is incidental to the technical question of vesting title. It has to deal purely with the Land Registry regulations of noting a change of name.
I agree that there is no great problem with regard to the Land Registry but I believe that there could be problems in relation to the Registry of Deeds. I think the Minister is wrong in saying that it is the section that vests or changes the ownership; it is the making of the scheme by the board, and the seal, that does it. The section, of itself, unless somebody applies to the board to make the scheme, will not change the ownership because, presumably not every group of trustees will wish to become incorporated under the scheme. If such a scheme is made under seal by the board and subsequently some one, or more, of the trustees purport to deal with the property, or some part of it, in some way a bona fide purchaser from him, or them, for value, without notice having searched in the Registry of Deeds and not found notice of a scheme having been made under section 2, will surely, in equity, take priority over those who hold under the unregistered scheme under section 2?
I take the Deputy's point but I cannot see that that would be so. If a charity applies to be incorporated and the application is granted then, by virtue of section 3, the property of that charity vests automatically in the new incorporated body. If trustees of that body were to attempt to alienate the property, they could not do so and the fact that a purchaser would be bona fide would not mean that he could rely on registration to protect him because he would be assumed to know the law and to know that the law permitted the incorporation of unincorporated charities. He would be under an obligation in his requisitions to inquire whether a scheme had been made under the terms of the Act. It would be apparent from the documents that there was a charity. On receipt of a reply to that inquiry he could proceed accordingly and I do not think that any question of priority in the Registry of Deeds would arise. Perhaps this is a question that we might have examined in more detail. I do not think that the situation envisaged would arise but I will have a further look at the section.
This is the section that deals with the problems of some charities that were incorporated by charter and whose powers to alienate their own property were curtailed by that charter. I think that this gives the board power to enable sales to take place that might otherwise not take place, a classic example of this being Kings Hospital on their sale to the Incorporated Law Society.
We shall not mention whatever circumstances prevailed in that case.
I move amendment No. 6:
In page 5, line 39, after "person" to insert "having an interest".
This is another drafting amendment. It has been introduced in response to a suggestion made during Committee Stage in the Seanad.
One of the snags about putting in a sort of extended clarification of "person" here is, that having defined it to that extent, the next and inevitable question is to define "having an interest".
The point occurred to me too, but who is to say who has or who has not an interest except the commissioners?
I can foresee far more litigation in relation to the words "having an interest" than to the word "person". One thing that we might all learn is that the more words that are put into a statute the greater the potential trouble one is creating for oneself. I have no objection to the amendment but I do not think it helps at all. While it makes certain aspects a little clearer it does anything but clarify certain other aspects. That is a danger that draftsmen in general should beware of because clarifying some aspects of a matter such as this may well raise many other issues that would never have arisen otherwise.
It confines the classes of persons who could apply to the board. As drafted it could be any person. If a stranger applies he would have to be listened to but at this stage he would, prima facie have to show some connection, no matter how tenuous, with the object in hand. I understand that the local bishop is the most likely applicant.
Or, the most unlikely, in certain circumstances.
I have no objection to the section. The only thing that occurs to me in regard to it is that on the last occasion on which we were discussing this Bill Deputies Wilson and Callanan referred to certain problems that could arise as a result of it. The Minister on that occasion may not have had full information in relation to the problems that were raised but perhaps he may now be in a position to deal more fully with those difficulties.
Deputy Callanan's objection went to the very root of charity law because his point was that when one of these schools would be sold it should be possible that the proceeds could go to a purpose that was other than educational. That, of course, would be upsetting completely the whole point of charity law which prescribes that gifts made originally for certain purposes must be applied for those purposes or cy-près. He was making the point that a parish could sell a school and apply the proceeds for a purpose other than an educational purpose. That would be widening the law too much. It would be contrary to the whole principle of charity law to enable funds to be used for a purpose other than that envisaged in the original charity or, if that no longer exists, in a charity as near in type as can be found.
Deputy Wilson's point was that there were some cases where the successors to the original landlord showed title and re-entered and resumed the property. I think they are entitled to do that.
What I was referring to was the interpretation of "educational". The position all over the country at the moment is that when a school is sold, regardless of which denomination sell it, they cannot use the money. If we do not regard that what a man preaches in a church is educational then, that man should not be there at all. One school which I have in mind was sold for about £2,000 and it was decided that the money would be used to repair the church. One might say that the education that takes place in a church by way of preaching is sectarian but the schools are sectarian too. In the particular case I have in mind, the school belonged to a certain religious denomination. It is on the definition of "education" that the Minister and I differ. It is grossly unfair to whichever denomination happen to own a school that their money be held up. What type of education are they expected to put the money into? These small schools that are being closed all over the country were given, in the first instance, by way of charity for educational purposes. I ask the Minister again to consider seriously this question of the interpretation of "education".
I have no doubt that what Deputy Callanan hears in his local church is both enlightening and elevating but whether it is educational in the legal term is another matter. I am afraid it is not so. The proceeds from the school were given to a community originally for educational purposes must be applied for a similar charitable purpose. I do not think it would be beyond the wit of the particular trustees in question to find a charitable purpose of the same type within their own parish to which they could apply the money without having to spend it on repairs to the church.
Am I correct in thinking that under section 4 it is specified that where a scheme is being devised for the cy-près application of a charity where it is educational the cy-près application must be for education also, thereby implying that if it was some other form of charitable scheme that was being applied cy-près the application cy-près could be to a different form of legal charity?
No, it has to be for education, where the original charity was for this purpose.
Because it provides that only in relation to education, does it not imply that for example, a charity for the relief of poverty could be applied cy-près for a religious charity or vice versa?
It could if the object of the other charity was the relief of poverty.
It is the object that governs it.
The Minister has people available to him who are more familiar with the details of the sections than either he or myself. However, I wonder if, in fact, there is such a provision in section 4?
There is a provision in section 4 (2) which states that a scheme under this section framed under the seal of the board may enable the trustees of a charity to sell the property and to invest any moneys arising therefrom for the benefit of the charity or, if the charity is one for the furtherance of education——
That is what I am thinking of. It is set out in section 4 (2) (a) (i) and (ii). Sub-paragraph (2) (a) (i) states:
In case the charity is for the furtherance of education, any other charitable purpose which, in the opinion of the Board, is for the furtherance of education,
and subparagraph (ii) (a) (ii) states:
In any other case, such other charitable purpose as the Board should think proper.
It seems strange that distinction is there. For that reason, the point made by Deputy Callanan is a valid one because the categorising of charities is broken down in section 4 (2) (a) (ii) in relation to each charity other than an educational charity.
This section deals only with a very limited type of charity, namely, one established by charter or statute. I do not think it breaks the doctrine of cy-près as might be thought by section 4 (2) (a) (ii) because the doctrine of cy-près ensures that such other charitable purpose must be a cy-près purpose. Bearing in mind the fact that the original instrument setting up the charity would be a statutory charter which would be very specific in the objects prescribed, if these failed—as they have failed, otherwise we would not have this section—the people for whom the section is designed and at whose request it was introduced have also requested that they would be relieved, because of the specific nature of the original instrument, from having to apply the funds for that purpose, it having failed totally. Consequently, there would be room for the board in this case to direct such other charitable purpose, the original object having failed completely. The normal educational trust would be in broad terms and it would be possible to frame a cy-près application. Education has many ramifications nowadays but the old charters were for a very specific purpose related to a specific institution generally. As that has failed completely, the people affected have specifically asked for this sub-paragraph.
The point at issue in section 6. and it is demonstrated by the part of section 4 to which we have referred, is that in a cy-près application, if the charity is of any nature other than educational the funds of the charity can be applied for any charitable purpose. If the charity is of an educational nature the funds of the charity can only be applied for educational purposes. The point made by Deputy Callanan is valid. He quoted the example of a school being sold where the proceeds can be used only for educational purposes, not for some other charitable purpose for which the trustees might wish to use them. For example, if an old disused church is sold, the trustees could use the proceeds for any charitable purpose——
No, they could not.
They will be able to do so provided the board sanctions it when this Bill is passed. They would be able to do this under section 4 (2) (a) (ii).
The words "other charitable purpose" in that sub-paragraph must be read as "other charitable purpose cy-près”. It could not be read otherwise. The board have to act within the law and the law requires that any application for charitable funds must be necessarily cyprès.
It goes back to the old division of charities. There is the advancement of religion, the relief of poverty, the furtherence of education. but I have forgotten the fourth item——
It is public purpose.
Three of these will be interchangeable, other than the furtherance of education. Deputy Callanan's point is, why not allow the application of charitable funds originally established for the furtherance of education on some other charitable objective which is not the furtherance of education?
That cannot be because that would be contrary to the doctrine of cy-près and that change is not made under section 4 (2). This states that in the case of a scheme made by the trustees with the approval of the board for the sale of property, the proceeds of that sale where the charity is for the furtherance of education shall be applied for the furtherance of education and in any other case for such charitable purpose as the board may think proper. Where the original charity was for education, the proceeds can be applied only for educational purposes. If the original charity was not for education, it would appear it can be applied for another charitable purpose as the board may think proper. However, the board are constrained by the requirements of the cy-près doctrine to think proper only such other charities as fall within that doctrine and are of the same nature as the original charity.
The type of school mentioned by Deputy Callanan is a very specific type of school. The lease of the plot in question was granted specifically for educational purposes and all the law wants to ensure is that should that school be sold the proceeds would be used for educational purposes, not for general parochial purposes even though that would be a charitable object. The law does not allow the proceeds of one type of charity to be used for the furtherance of another; it must be used all the time for the furtherance of the same type of charity.
Could the Minister say what the legal interpretation of "educational purposes" would be in this case? For instance, would adult education come under it?
I should imagine so. "Educational purposes" is not a matter of legal definition but, if you like, a matter of application from time to time by the board, and I have no doubt that adult education would fall within it. For example, if the parish in question decided to use the proceeds of the sale of an old school for furthering adult education within that parish I have no doubt that would be a proper application of the funds.
If you accept the four traditional categories of charity —there is certainly Common Law recognition of them whatever about statutory recognition of the categorisation of them—you have a situation under section 4 where any three of them can be run together, but educational purposes are treated separately. To go back to the example Deputy Callanan gave originally and change that to a church, for example, the Minister says that a lease made under the Leases for Schools (Ireland) Act, 1881, would have been for a very specific purpose and that land would have been given for that very specific educational purpose. I agree, but equally a church built with charitable funds, and presumably the land on which it stands bought with such funds, was also built and bought for an equally specific charitable purpose, namely, the advancement of religion. We now have a curious anomaly— unless this matter is considered, perhaps, between now and Report Stage —in that the proceeds of sale of a defunct school will be very limited but the proceeds of sale of a defunct church will not; they will be available for any charitable purpose which the board regards as reasonably cy-près.
That anomaly is highlighted from a practical point of view by what Deputy Callanan said. One would think, for example, that if the proceeds of the sale of a disused church could be applied with the consent of the board by the trustees for the relief of poverty, why should the proceeds of the sale of a disused school not be similarly applied. The distinction has to be borne in mind all the time that there are four categories of charity and that one of them now appears to be treated differently and will undoubtedly cause some problems. Some people who, perhaps, are not familiar with the whole background will feel, as I think Deputy Callanan and his constituents feel, that it seems rather foolish that one type of charitable property can be dealt with in a certain way while another cannot.
First, let us take the example the Deputy has mentioned of a disused church which is sold. He suggests, the proceeds could be applied for the relief of poverty. I would disagree with him; that would be an improper application of the proceeds because the proceeds would have to be applied cy-près for the advancement of religion, not for the relief of poverty unless it was in the original charter or whatever it was granting the ground on which that church was built. Secondly, in this section we are not dealing with charities generally but only with charities established by statute or by charter to deal with a specific type of charity. If it is for education it must be applied for educational purposes; if it is for other charitable purposes, the board will direct what those other charitable purposes are—but cy-près, which is the only way in which the board can direct. The board is constrained by legal requirements to apply that doctrine.
Possibly it might meet the Deputy's criticism if paragraph (2) were to say: "In any case where the original charity was for the relief of poverty the proceeds should be applied for the relief of poverty..." and then have another paragraph providing for a situation where the grant was for educational purposes. It is not spelled out; it only says "for such charitable purposes..."
No, but does the Minister not agree that it is curious that the very point that he talks about is spelled out in regard to education but not in relation to the other three and if paragraph 2 stood on its own you would have no problem? Is that not curious?
Yes. Possibly the answer would be to draft particular paragraphs to deal with poverty, religion and with the fourth category of charity, public purposes.
But paragraph (i) deals specifically with education and limits it specifically to educational charities. Is not the implication in the general terms of paragraph (ii) that the other three categories are not subject to that limitation?
I do not think that implication arises because, again, if I might remind the Deputy, this particular section goes back to a very limited number of charities. In fact, only a few, so far as we are aware, are limited by statute or by charter, and will be affected by this section. They are mostly schools. But if it should happen that another similar type of charity should come within the ambit of the section it can be dealt with also by the board on request by the trustees. However, the board can only deal with it in relation to the charitable purpose which is specified in that particular statute or charter. If, for example, there was a statute setting up a fund for the relief of poverty and there was a building of some sort as part of the assets of that charity and if that building were to be sold and the trustees were to come to the board under this section, the board could not direct that the proceeds be used for any purpose other than the relief of poverty.
Apart altogether from the plot given for educational purposes the building erected was in many cases erected by the people's free labour. Will they lose this with the cost of the school, if the little plot on which the school was built and which was given only for that purpose could not realise the amount of money which the building did realise? In this case the building realised the money because of where it was situated. That building was erected by the free labour of many of the parishioners. Is it not strange to have some law which prevents them getting portion of that money? I have not a legal mind but I cannot understand why all the money should be directed in the one direction just because the plot was given for that reason. All over Ireland a great amount of free labour was put into those schools. Now that the people want to put it into their churches of either denomination they cannot do it; it must all go for educational purposes even though the buildings made the plots more valuable.
If the people in the community laboured hard to build a school for themselves they did so for educational purposes and their grandchildren or great-grand children should be entitled to have the proceeds of the ancestors' labour also devoted to educational purposes rather than have them go into the general parish fund.
I move amendment No. 7:
Before section 7 to insert the following new section:
The Board may order the costs and expenses of and incidental to any application, order or scheme made or framed under section 2, 4, 5 or 6 to be paid or raised out of the property of the charity concerned or the income thereof or to be borne and paid in such manner and by such persons as the Board may consider just.
This amendment, which was suggested by the Charity Commissioners, follows a similar provision in section 43—that is the power of the Board to appoint new trustees of charity—of the Charities Act, 1961. The proposed provision will enable the commissioners to order that costs and expenses incurred by trustees in connection with applications made by them under section 2 (incorporation schemes for charity trustees), section 4 (schemes in relation to charities established or regulated by statute or by charter) the one we have just been discussing, section 5 (transfer of churches vested in the Charity Commissioners under the 1844 Act) or section 6 (vesting orders in relation to charity leases) be paid out of the charity funds.
The words used in the amendment are, "paid or raised out of the property of the charity concerned or the income thereof or to be borne and paid in such manner and by such persons as the Board may consider just." Does that imply that persons other than the trustees might be ordered to pay?
It could happen that there might be an aplication cy-près as a result of one of these applications and that a charity other than the charity concerned might benefit from the disposition of the charity fund or land. It would be only just that the trustees of that other benefiting charity would contribute to the costs of the application and so relieve the giving charity of the entire legal costs involved.
Is there any provision where an application under one of the four sections referred to in this amendment is opposed either successfully or unsuccessfully by some third party, presumably a lessor, or someone of that kind? What would the situation be in relation to costs, or what would the powers of the board be in relation to that?
If there was opposition it would, I presume, involve litigation and costs would follow the event. I do not think there would be any reason to change that rule. I gather, too, that the commissioners have discretion in regard to matters of that nature as to the award of costs and, in the case of an unworthy application, I am sure they would punish the applicant by awarding costs against him if it did not involve litigation in the courts.
I wonder is that enforceable?
In terrorem is often helpful.
Would it not entail going to the court for an order?
The court has an overriding charitable jurisdiction and it would be open to any person aggrieved by the conduct of the commissioners or the conduct of a particular charity, if he felt the commissioners were not moving in it, to apply to the court to intervene. That overriding jurisdiction is there all the time.
I move amendment No. 8:
Before section 7 to insert a new section as follows:
The Principal Act is hereby amended by the substitution of the following new section for section 32:
32.—(1) A Court may invest or order, empower, consent to or approve of the investment of any fund held upon any charitable trust in such manner, on such terms and subject to such conditions, as the Court thinks proper whether or not such investment is authorised by the trust instrument, if any.
(2) The Board may, in their discretion, invest in any fund held by them upon any charitable trust in such manner as they think proper, whether or not such investment is authorised by the trust instrument, if any, or by law.
(3) The Board may, if they think fit, on the application of the trustees of any fund held upon any charitable trust, by order confer upon the trustees, either generally or in any particular instance, power to invest the fund in such manner, on such terms and subject to such conditions, as the Board may think proper, whether or not such investment is authorised by the trust instrument, if any, or by law.
(4) Subsection (3) does not apply to a fund to which section 33 for the time being applies.
I propose that we take amendments Nos. 8 and 9 together.
They form a composite proposal.
These amendments arise out of suggestions made in the Seanad that the Charities Act, 1961, should be amended to allow for a more liberal investment of charity funds. It was argued that, by virtue of the investment provisions of the Act, charities are denied access to opportunities for enrichment of the objects of the charity. Under the existing law, unless there is a free power of investment, charity trustees must invest their funds in a limited range of Irish securities. The same is more or less true in respect of ordinary trust funds. Section 32 (3) of the Charities Act, 1961, allows investment of charity funds in (a) investments authorised by law, that is, by the Trustee (Authorised Investments) Act, 1958, (b) Irish securities, such securities being, first, stocks or shares 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, secondly, freehold or leasehold land in the State. The 1958 Act and the 1961 Act affect only trusts that contain no specific power of investment. In practice, anybody establishing a trust, whether charitable or non-charitable, would avoid the restrictions of these Acts and give the trustees a wide power of investment.
Section 32 and section 33 of the 1961 Act made a substantial change in the law as it then existed. Prior to 1961, the High Court had a wide inherent jurisdiction over charities. I quote from Lord Watson in Andrews v. M'Guffog, an 1886 case, in which he says:
In the case of a public charitable trust the court have a power and discretion which does not belong to them in the case of a private trust. The rule is this, that while the court cannot alter the object of the trust, they may, according to the circumstances of each case, vary the mode of its attainment although differing from the directions of the trustee.
This case was cited with approval by Vaisey J. in Re Royal Society's Charitable Trusts [1956] Chancery 92.
Our High Court in the case of charitable trusts could authorise changes in the trusts, including changes of investment, by way of a scheme. A scheme could provide for investment outside the range authorised by law or by the trust instrument, but the jurisdiction to frame a scheme had to be exercised sparingly and not indiscriminately. An example of the exercise of this jurisdiction by the High Court will be found in the case of W.J. Sweeney Trusts. This case which occurred in 1960 is unreported but is referred to in the Irish Law Times and Solicitors' Journal of 23rd April, 1960. The effect of section 32 of the 1961 Act was to take away from the High Court the general power in charity cases to vary investments, including the power to permit investment in non-Irish securities.
The Trustee (Authorised Investments) Act, 1958, does not prevent the High Court in the case of an ordinary or private trust from permitting the investment of the trust funds in nonauthorised securities. If all the beneficiaries are of full age they may alter the trust in any way they like. If infants or unborn persons are concerned the trust may only be altered by the High Court. The jurisdiction of the court is an administrative jurisdiction to be exercised where a situation has arisen in regard to the property creating what might fairly be called an "emergency"—and under the heading of administration comes the investment of the trust funds. However, under section 3 of the 1958 Act, money under the control or subject to an order of the court —for example, damages awarded to a minor—must be invested in authorised securities.
The present position in regard to the variation of trusts is anomalous. Persons of full age who are the sole beneficiaries of an ordinary private trust may alter the trust in any way they like. On the other hand, although the trustees of a charitable trust have power to have the trust varied for the benefit of the objects thereof, the variation may not involve a change to investments not authorised by section 32 of the 1961 Act, and the investment restriction applies even if the beneficiaries of the charitable trust are of full age.
The Government consider that, in the interests of charities, section 32 of the Charities Act, 1961, should be amended in order to restore to the High Court the inherent power which it had prior to the 1961 Act to authorise changes in investments of charity funds. In other words, we are satisfied that the court should have discretion to authorise the investment of charity funds in any securities, including non-Irish securities. We are also satisfied that the Charity Commissioners should be given powers similar to those of the court in the case of charity funds. It need hardly be said that the court and the board will be bound to exercise their discretion carefully in choosing the investments. In any event, in the not too distant future the investment provisions of the 1961 Act and the Trustee (Authorised Investments) Act, 1958, will have to be considered in the light of Article 67 (1) of the Treaty of Rome and any directive that may be issued thereunder. This article provides for the free movement of capital within the Common Market.
Moreover, in England and Northern Ireland although there are provisions in regard to authorised investments in the case of ordinary trusts the trustees may nevertheless apply to the High Court for authority to vary their investments and also to vary the trust itself. I hope when time is available to examine these matters in the context of a revision of the whole law as to trusts and trustees.
In conclusion I should like to say that the present amendments of the law are strongly supported by the Charity Commissioners.
I am not altogether happy about these amendments for the reason that they would appear to encourage investment outside the State at a time when that investment is not necessary in the interests of the charity. On reading section 32 (3) (a) (ii) of the 1961 Act I find that it is in fact permitted to invest in the "ordinary stock or shares of any industrial or commercial company incorporated in the State or maintaining in the State at the time of the proposed investment a register of its shareholders resident in the State" provided the ordinary shares are quoted on what is there referred to as the Dublin or Cork Stock Exchange.
I must confess I was unaware that the existing power was as extensive as that, because I thought it was confined to debentures and preference shares. The existing power, therefore, would seem to me to be a wide one, and any difficulty that might arise or might have arisen for charitable trustees or for the commissioners, to my mind, would be simply that there was not a sufficient variety of investments quoted on the Irish stock exchange to give the best value possible to the charities under their care. This may have been true in the past, and I do not deny that it may have been true in the past, but I genuinely doubt if it is true now. We have seen over the last month or so three or four pretty large public issues on the Irish Stock Exchange. The volume of business done there generally is considerably greater in recent years than it was in the past, and there is a pretty wide variety of and a fairly active market in ordinary shares of viable commercial concerns in this country.
The implication in the amendments is that Irish investment is not adequate or not sufficiently beneficial for charities and that, therefore, it should be extended to English or foreign investment. I do not know whether the commissioners have had difficulties in making adequate or beneficial investments in this country. In the time that I was in the Department of Justice I do not recall the case having been made to me that they were limited in that way. From a purely national point of view I am somewhat unhappy that they appear now to be encouraged to invest abroad by these amendments if they are passed.
I do not think that the point which the Minister made the last day when I referred to this is quite valid. He said private beneficiaries under a trust of full age and full discretion and, indeed, that charitable trustees had full discretion also where they were given that in the instrument. I pointed out that a very high proportion of them would have the power specifically from the instrument establishing them. The Minister said he thought it was unfair that those who had not the power specifically should be subject to this limitation. It is not the fault of the State or of the Legislature that they have not got these specific powers. I am not satisfied that there is any duty on the State or on the Oireachtas to extend powers to them to enable them to invest abroad when they have full and ample power under section 32 of the 1961 Act to invest here.
I should like to hear from the Minister whether the commissioners have made representations to his Department to the effect that they are precluded from making the necessary beneficial investment and perhaps, without mentioning any names, we might have examples of it and also of the amounts of money that are involved in relation to any such examples. I would not have thought myself that at the present time these problems would exist. I can accept that they may well have existed during the past. My reluctance to welcome these amendments stems from the fact that I fear that there might be a significant outflow of money in the form of charitable funds if these two amendments are passed.
First of all, I would take issue with the Deputy when he says these amendments will encourage investment of moneys abroad. This is wrong. There is nothing whatever in the wording of the sections to lead to that interpretation. All that these two new sections do is to permit a wider range of investment for Irish charitable funds. This was the position up to 1961. The restrictions were imposed only in 1961; they are quite young in terms of legal age, and it is intended now to go back to the pre-1961 position and to give jurisdiction to the High Court and to the Charity Commissioners to order the investment of trust funds in securities outside the State. I do not see anything wrong with this. It could be to the advantage of the charity that this wider range would be available to it without in any way damaging the national interest. I have no statistics but I find it difficult to imagine that the investments would be of such magnitude as to affect the national interest.
If for some reason—far be it from me to try and guess what the reasons might be—the High Court or the Commissioners of Charitable Donations and Bequests, both bodies well experienced in advising and organising charities and in looking after investments of charity funds or trust funds, thought there was a good and valid reason for investing outside the range of securities available in the State, then I think the legal power should be there to enable them to do so. It is unfair that certain charities have complete discretion as to where they invest their funds, while a limited number of charities are prohibited from enjoying that advantage. In the case of charities that do not contain that power within their instrument of creation, that power should be available whether it is used or not. I understand there was an actual demand. This is what has prompted the change at this time, in so far as a number of small charities intend to set up a common investment pool so as to form a unit trust. If the trust were to be confined to securities on the Dublin Stock Exchange the amount of money involved could seriously affect the market, and it would be essential for this pooling of funds of the small charities that they would have power to invest abroad.
Although the power was there until 1961, I understand between 1947 and 1961 the Charity Commissioners did not invest any of the funds under their control in non-Irish securities. I think that is an indication that, while the power was there, it was used very sparingly. I take the Deputy's point that the range and variety of investments available in this country have vastly increased in recent years, and I do not doubt that these are the ones to which both the court and the commissioners would first look. However, there may be considerations that cannot be envisaged at the moment but which would make it desirable, in a few particular instances, to look further afield. All that these amendments do is to give the power to look further afield, and both the High Court and the commissioners can be guaranteed not to exercise their powers flippantly. As I indicated, there is a particular demand in the case of these small charities coming to form a common investment fund.
The Minister said that this particular section will enable investment to be made abroad. Is there any way by which this House could be informed at regular intervals about how the investment was going and what proportion of it was going abroad? With regard to the free movement of capital, if a directive issues from the EEC that would be time enough to deal with that. Could this House be informed at regular intervals how this investment is going, in view of the fact that this new power enables investment to be made abroad?
I wonder if the Minister is aware that within the last few days an Irish registered unit trust was established in this country, the bulk of its investment, but not all, being Irish? It is a company registered here and quoted on the Irish Stock Exchange. Those small charities, who wish to pool their funds for the purpose of investing in a unit trust, could quite easily invest in that. I hope that unit trust will be the first of a number to be established under the Unit Trust Act, 1972. The indications are that there will be more.
The Minister disturbed me a bit when he said, perhaps inadvertently, that a number of charities wanted to pool their funds for the purpose of investing in unit trusts and if they were to invest here the investment would affect the market in some way. I forget the precise words that he used but the implication seemed to be that the amount of money which they would invest would be so large that it would presumably drive up the price of certain types of shares. I would have thought that the amounts involved would not be of sufficient significance to have any effect on the market one way or another. I asked the Minister earlier if he had any examples of the amounts involved and whether, in fact, representations were received in relation to this. He told me there were in relation to unit trusts but I think the events of the past week may well have changed that situation.
As one who had something to do with the provisions which the Minister now proposes to change, I must say that I can see the point in what he is doing and, oddly enough, I see it a little differently from Deputy Des O'Malley. These restrictive provisions were brought in at a time when it was desirable to channel the maximum amount of investment possible into Irish developments. The situation which Deputy O'Malley describes can also work the other way. I think our financial institutions and structures have so developed since then and the inflow of capital into this country has so increased that, perhaps, these limitations and restrictions on the investment of charitable funds outside the country are not now as necessary as they were at that time. I am afraid I have not read the section carefully enough in the time available but the Minister might deal with this point. If there is anything valid in what I am saying he might consider, between now and Report Stage, doing something about it.
It does not seem to me, in the widesweeping powers which the Minister is now giving to either the commissioners or the court, that he is putting any obligation on either the commissioners or the court to restrict their investment abroad to situations where similar types of investment are not available in this country. In other words, I think it is possible to visualise in the case of some particular charity, which has some particular objectives, that the appropriate channel of investment would not be available on the Irish market and there might be some sophisticated type of security available abroad, which is not available here.
The Minister might consider whether he should not enshrine in this section some such limitation and restrict the power of the commissioners and the court to investments abroad only in cases where they are satisfied—I leave that to their judgment and discretion —that a suitable and similar type of outlet is not available for the funds on the Irish scene.
First, to deal with Deputy Wilson's point, I understand that the Annual Report of the Charity Commissioners is laid before the House and it shows the various investments of funds at the disposal of the commissioners. There is no such requirement in the case of the courts. I think when we have the opportunity here of meeting a requirement halfway we should do it. So many countries are inclined to resist to the last moment for particular, selfish interests that in this case when it costs us nothing we can be seen to be outgoing.
In the case of this pooling of the smaller charities, to which I referred, and which Deputy O'Malley mentioned, I understand they are only being allowed to invest some of their funds outside the State. It is not the intention in these charities that all their funds will go outside the State. While the strength and sophistication of the local stock exchange has increased immensely in the last few years it is still a sensitive area to a large flow of money in any one particular narrow direction and I think it would be only right that this new amalgamation of the small trusts should have the power to go outside the State with some of their funds.
I do not know the composition and structure of the unit trust which the Deputy mentioned. Its particular investments might be investments which would not appeal to a charity. There might be a speculative element in some of them and it might not be suitable. It would be wrong to say because this one exists the extra scope should not be given.
With regard to the point raised by Deputy Haughey that the section should try to specify the circumstances in which investment could be made abroad I do not think that would be possible.
I did not say "specify the circumstances" but just to have a directive principle enshrined that only when such an investment was not available at home would the freedom apply.
I do not know if that would be possible. I find it difficult to see what type of investments would be available abroad that are not available already at home at the moment.
Why put it in at all?
Because there might be better ones of the same type abroad to suit a particular charity. Some of those available abroad that are not available at home might be ones to keep very far away from. The section has to be worded to leave discretion to the court and to the commissioners. They both have a long tradition of dealing carefully with charitable funds and I would have no hesitation in giving them absolute discretion. There may be situations which may arise, and which cannot be specified at the moment, where it would be desirable that the court would have power to authorise investment in securities outside the State.
The House will agree that both the court and the commissioners are conservative people who will not make investments that would run beyond the normal range of careful investing. Between 1947 and 1961 the commissioners, while they had the power to invest abroad, did not invest in funds other than Irish securities. The whole history of the thing goes to show a conservative approach and I have no doubt that if suitable investments are available at home they will be picked in the first instance.
It was specified that we were discussing amendments Nos. 8 and 9 together. I did not speak on the latter amendment and I do not think the Minister did.
In effect it permits the same thing in the case of a trust where there is a life interest.
The situation in the sort of case envisaged in amendment No. 9 is one in which one might sometimes feel there could be a good deal of conflict about the kind of investment the trustees would make. Where the life tenant is a private individual and the remainder man is a charity, clearly in such a situation an investment in a security that would give a high rate of interest annually would be the more beneficial to the life tenant. Such an investment might not be beneficial to the charity because by keeping up the rate of interest you almost inevitably nowadays deplete the real value of the capital.
Would the Minister not take the opportunity, when he replaces section 33 as he proposes to do by this amendment, to deal with what must be a cause of loss to charities in this respect, particularly in inflationary times? One can clearly see the conflict in interests here and one can sympathise with the anxiety of the life tenant to get the maximum income, because the life tenant is usually a widow or some other person to whom the testator felt a sense of obligation or who was dependent on the testator in some way. One has a natural inclination to preserve the assets at the value they had at the date of the testator's death. In proposing to replace section 33 of the 1961 Act, did the Minister consider any possibility of resolving that conflict, which is likely to be greater in these times of high inflation than it would have been in 1961 when the section was originally passed?
The only way to resolve that conflict is to allow for a certain amount of speculation and the risks inherent in that are more undesirable than are the consequences of investing in stocks that suffer from the effects of inflation. This is entirely a question of investment policy and I do not know whether it would be suitable to write this into the section. We must rely on the experience and expertise of the commissioners and the courts to authorise investments which would cushion the effects of possible inflation as much as possible.
I do not think one can generalise about this. It has to be left to the discretion of those managing the fund. As Deputy Esmonde has just pointed out to me, the court can resolve the matter should there be any conflict between the life tenant and the trustees. I am not aware there is any dissatisfaction on the part of beneficiaries regarding the investment policy of the court or of the commissioners. I think it would be best to leave it like that, to leave it to their long experience.
I should like to look at these two amendments the next time, and I now give notice to that effect. I do not know whether it is necessary now to apply to have them re-committed.
We are in Committee?
For the next occasion.
The only thing I wish to say in that respect is that it has been a long time since this Bill was conceived and there is some anxiety on the part of some charities to see it as law.
I am aware there is a certain urgency about certain aspects of it. It lay fallow on the Order Paper of the Dáil until last week. It would not be my intention to delay it more than a few days.
If there is need for urgency it is in the Deputy's constituency. I heard that today.
I move amendment No. 9:
Before section 7 to insert a new section as follows:
The Principal Act is hereby amended by the substitution of the following new section for section 33:
33.—Where—
(1) any fund is held upon trust, after the determination of or subject to any prior life interest or other limited interest, for any charitable purposes, and
(2) the trustees give notice to the Board in writing that they desire to invest or vary the investment of the fund,
the following provisions shall have effect—
(a) the Board shall consider the proposal and inform the trustees in writing whether or not they object to the proposal;
(b) if the Board inform the trustees that they object to the proposal, the trustees may apply to the High Court for leave to make or vary the investment and shall give notice of the application to the Board and to such other persons as the Court may direct, and the Court may make such order thereon as the Court thinks fit;
(c) if the Board inform the trustees that they do not object to the proposal, it shall be lawful for the trustees to make or vary the investment in the manner specified in the proposal.
One of the problems about these sections is that it is not clear at first glance what precisely they relate to. Perhaps the Minister might give us a brief summary.
Section 8 amends section 34 of the 1961 Act. It extends the board's power in relation to the disposition of land belonging to a charity. Section 34 of the 1961 Act enabled the board to authorise the trustees to make a disposition of land by selling it or exchanging it for other land or surrendering a lease of it. A disposition of land under that section is confined to selling it or exchanging it for other land or surrendering a lease of it. It has been suggested that these powers be extended to cover dispositions of land by surrendering a tenancy of it, by accepting the surrender of a lease or tenancy of it or by mortgaging it. The power to mortgage is at present confined to certain purposes connected with improvements to land, for example, the erection of a new building or repairs. The amendment here is to give a general power to mortgage when it would be advantageous to the charity. It is a widening of the powers of the 1961 Act.
I move amendment No. 10.
10. Before section 9 to insert a new section as follows:
The following subsection is hereby substituted for subsection (1) of section 35 of the Principal Act:
‘(1) Where—
(a) any land is subject to a periodical payment payable to or for the benefit of a charity or applicable to charitable purposes, and
(b) an application is made to the Board by—
(i) the trustees of the charity representing that a sale of the periodical payment to the owner of the land would be advantageous to the charity, or
(ii) the owner of the land or other person having an interest requesting the Board to authorise a redemption by him of the periodical payment,
the Board, may, if they think fit, inquire into the circumstances, and if, after inquiry, they are satisfied that the proposed sale or redemption can be effected on terms which would be advantageous to the charity, they may authorise the trustees to sell the periodical payment to the owner of the land on such terms and conditions as they deem beneficial to the charity and give such directions for securing the due investment of the money arising from such sale for the benefit of the charity or for securing the due application thereof to such charitable purposes as they think fit. In case the redemption of a periodical payment is authorised under this section by the Board the trustees concerned shall, without unreasonable delay, take all necessary steps to effect the redemption. In case there are no trustees of the charity concerned or the trustees of such charity are unknown, the Board may, on receipt of such payment as they consider appropriate in the circumstances, by order free and discharge the land from the periodical payment.'
This is a drafting amendment providing for a restatement of section 35 (1) of the 1961 Act incorporating amendments thereto contained in section 9 of the Bill. The purpose of this amendment is to make the law easier for the reader to comprehend and to save him the trouble of having to refer back to the 1961 Act.
It is useful that the original section 9 of this Bill is redrafted in this way and put in by way of amendment. It is very difficult to read some of these amended sections. My eyes stray down from section 9 to section 10 and I see the very same thing without the benefit of a redraft. Perhaps it is not as complicated. It is a good principle that there should be redrafts such as are proposed here. I assume that the meaning or effect of the section is not in any way changed by the redraft.
No.
Is the amendment accepted? The acceptance of this amendment involves the deletion of section 9.
Section 10 amends section 37 of the 1961 Act by extending the power of the board in regard to the granting of leases of land belonging to a charity. Under the 1961 Act the board can authorise the trustees to grant certain leases. Where the board are trustees they themselves can grant such leases. The 1961 Act restricts the lettings to lettings on building, repairing and improving. It is considered that this restriction is obsolete. In fact, no lease of that nature has ever been granted. The amendment, in fact, extends the power to any letting of land belonging to a charity.
This section amends section 43 of the 1961 Act. It proposes to enlarge the power of the board to appoint new trustees of a charity and to vest the property of the charity in the new trustees. The 1961 Act gave the board power to appoint new trustees and to vest in new trustees but it is confined to charity property comprising land. There is no reason why this should be so. It is proposed to extend the power of the board to allow for the vesting of any property in the trustees.
This is one of these examples of a very long section, running to three pages or so, being extensively amended in most of its subsections. It is somewhat difficult to read in its new form. It is one of the sections that might perhaps have been dealt with by a complete redraft, as was done in the case of section 9 of the Bill.
I take the Deputy's point. I will look at it in the light of that remark. Most of the changes, which appear complicated at first sight, are really dealing with questions of appealing to the High Court. The matter might not be as complicated as it looks. We will read it in the light of what the Deputy has said.
Section 13 amends section 52 of the 1961 Act. It reverses the present rule whereby a personal representative has to publish advertisements of a charitable bequest unless exemption is granted by the board. The change is to exempt from publication in all cases, unless the board require it.
Will the solicitor for the personal representative be in the position notwithstanding this change, that in each case he will have to write to the board sending them the probate and, presumably, a receipt showing that he or his clients have paid the charitable legacy.
No.
I know that he will not have to write to them for exemption from publication, but will he have to prove payment?
No. He will not have to prove payment. The commissioners, from time to time may, of their volition, look for evidence of payment. There are no global requirements on the personal representatives to furnish evidence of payment automatically to the commissioners.
This would be in the nature of a spot-check by the commissioners now and again?
Yes.
Is there not some danger, if that is so, that in some cases charitable legacies will not be paid by personal representatives?
I do not think so. That would suggest that the administration of estates had not been conducted properly. If there are responsible executors and solicitors, the chances of that happening are practically nil. Even if it were going to happen, the present system would not prevent it. The present system involves a lot of administrative difficulty in obtaining exemption from publication.
