This Bill has a twofold object. Firstly, it proposes to continue in existence the Commissioners of Charitable Donations and Bequests for Ireland (called the Board) and to consolidate and amend the statutory provisions, dating back over one hundred years, that govern their powers and functions. Secondly, the Bill proposes to make certain substantial amendments in the general law of charities.
The present Board owe their origin to the Charitable Donations and Bequests (Ireland) Act, 1844. They are the successors of an old Board who were established by an Act passed in the final year of the old Irish Parliament. Prior to the Union, a Committee, assisted by two judges, had been appointed by the Irish House of Lords in 1764 to sue for the recovery of charitable bequests and donations ‘withheld, embezzled and concealed.' This Committee was discontinued by the establishment of the first Board of Commissioners in 1800.
The main functions of the Charity Commissioners are of an administrative character. They have power to dispense with the publication of charitable bequests, power to advise charity trustees, power to institute legal proceedings and to certify cases to the Attorney General with a view to his instituting such proceedings, power to frame cy-près schemes, and power to accept gifts for charitable purposes. The Commissioners have had a long and distinguished history, and a record of devotion to public duty of which they may well be proud. They are an unpaid body and devote a considerable portion of their time to the important and responsible duties imposed on them by statute. They are a Board with invaluable experience and of outstanding ability. They have over the years set a fine example of the way in which Irishmen of different religious persuasions can work together for the public good. Their tasks are often, in the scheme of things, of a delicate nature, but this has never prevented them from serving the community in a way that leaves us very much in their debt.
Part II of the Bill sets out the constitution and jurisdiction of the Board. As at present, there will be eleven Commissioners, but they will be appointed without regard to religious belief. The Board will select their own Chairman; and at a meeting of the Board, where the Chairman is absent, the senior member, or such other member as the Board may decide on at the meeting, will preside.
Section 29 of the Bill will replace the Charitable Donations and Bequests (Amendment) Act, 1955, and give the Board cy-près powers for any gift up to £5,000 in value. The Board will be able to revoke an existing cy-près scheme, whether made by themselves or by the court, and substitute a new cy-près scheme in its place. I shall examine the cy-près doctrine more fully later on. For the moment, I propose to confine myself to giving a simple example of circumstances in which a cyprès scheme is necessary. Suppose a person leaves by will money to build a church in a particular district and it is found on his death that a church has already been built. The money will be applied cy-près for the repair and upkeep of that church. The term cy-près comes from the French, and, though there is some doubt as to its precise original meaning, by professional usage it now means “as near as possible” or “as near to it as possible.” In other words, the gift is applied as closely as possible to the intentions of the donor or testator, where those intentions cannot otherwise be carried out. The idea is to prevent the charitable purpose of the donor or testator being frustrated.
Part II of the Bill contains three important provisions dealing with the powers of the Commissioners that will be new to the law. They are section 30, providing for educational endowment schemes, section 32, providing for the investment of charity funds, and section 43, providing for the appointment of new trustees.
There is serious doubt in regard to the extent of the Board's powers to amend schemes under the Educational Endowments (Ireland) Act, 1885. The schemes concerned are schemes for the future management of educational endowments, of which there are a fair number in the country. An example of the type of alteration needed in a scheme would be the following. The governors of a school might, owing to lack of pupils, wish to dispose of the school premises and apply the moneys towards the grant of scholarships to other schools. It is proposed in section 30 to make it clear that the Charity Commissioners will be able to make any alterations in a scheme, framed under the 1885 Act, provided the alterations are in furtherance of education and not contrary to anything contained in the 1885 Act.
Section 32 will allow the Board to invest charity funds held by them in such manner as they think proper; and they will also be able to permit ordinary charity trustees to do likewise. Subsection (3) of section 32 lists the investments in which such funds may be invested. They are (1) investments authorised by the trust instrument or by the Trustees (Authorised Investments) Act, 1958, (2) investments in Irish industrial securities, and (3) investments in the purchase of freehold or leasehold land in the State. The Board or a Court may not authorise the investment of charity funds outside these three categories. Section 32 deals with every kind of charitable trust including trusts set up under statute or charter. This means that it will in future be unnecessary for any trust, such as the Iveagh Trust, to go to the expense of promoting a Private Bill in order to change its powers of investment. A simple application to the Board will suffice.
Section 43 proposes to authorise the Board to appoint new trustees of a charity wherever such appointment is necessary. It will be possible to appoint such trustees either to fill up the original number, or to replace an existing trustee or trustees, or to deal with the case where there are no trustees or they cannot be found. The section will also cure a defect in the Trustee Act, 1893, by allowing for the replacement of two or more trustees by a body corporate so as to discharge all the existing trustees. Where charity funds are vested in two or more trustees, it is often better from the point of view of the charity to allow the trustees to be discharged in order that a body corporate may act. There are at the moment a number of cases where charity trustees want to be relieved so that they can hand over to bodies corporate. The House will note that, under subsection (1) of section 43, the Board may act on the application of the trustee or trustees of the charity, or, if there are no trustees, on the application of an interested person. They may also, in any case, act of their own motion; but it is envisaged that normally they will act on an application. It is to draw specific attention to this that the subsection has been drafted in its present form.
So much for the constitution and jurisdiction of the Board. I now come to the final part of the Bill, namely, Part III, which proposes certain very important amendments in the law of charities.
Section 45 is designed to avoid difficulties that can and do arise in regard to what are known as Foundation Masses, namely, Masses to be celebrated in perpetuity or over long periods. Recently the Canon Law on the subject has been altered. In order to avoid risk and uncertainty in the fulfilling of perpetual obligations, it has been decreed that future Foundations of Masses are to be so understood that the Masses will be celebrated for fifty years from the date of the Foundation unless the founder has determined a shorter period. At the end of fifty years the capital and income still remaining are to be applied for the celebration of Manual Masses for the founder's intentions. Since the celebrated decision of the old Irish Court of Appeal in O'Hanlon v. Logue (1906) gifts for Masses are charitable, so that the rule against perpetuities does not apply. Under the section, gifts for Masses in perpetuity or for a period of more than fifty years will be construed and have effect as if the gift provided for the celebration of the Masses for a period of fifty years, and thereafter for the celebration of Masses during such period and on such conditions as shall be determined by the person to whom the gift is given, or his successor in title. Where the gift is administered by the Board, the remaining capital and income at the end of the fifty years will become vested in the Archbishop or Bishop of the diocese or in the major superior of the religious order as the case may be.
Section 45 will prevent the frustration of the intentions of donors and testators as gifts for Foundation Masses are not acceptable except in accordance with Canon Law. In effect what is proposed is the application of the cy-près principle to the gifts in question. If there is a gift or bequest for Foundation Masses, the direction of the donor or testator will be given effect to in the manner that is practicable and possible. That is what cy-près means. For section 45 to apply, the gift must take effect after the commencement of the Act. It will not apply retrospectively.
Section 46 is concerned with gifts for the advancement of religion. The section proposes that, in the case of such gifts, public benefit is to be conclusively presumed. The idea is that it will in future be no longer necessary to prove that gifts that are for the advancement of religion are valid both at common law and because they contain the element of public benefit. Validity at common law will suffice, as the late Judge Gavan Duffy held it does in Maguire's Case, reported in the 1943 Irish Reports. This case was followed by the late Judge Dixon in In re Sheridan, reported in 1957. Apart from these two cases, there is the excellent article, Public Benefit and Religious Trusts, in the July, 1946, issue of the Law Quarterly Review. The author, Professor Newark of the Queen's University of Belfast, shows how the insistence on the requirement of public benefit in religious trusts is unsound historically. Moreover, such insistence in the past has, the Professor points out, led the Courts to search for and to pretend to find a public benefit in the form of spiritual advantages which are not properly cognisable in a court of law. The section will ensure that the Irish Statute of Pious Uses, 1634, to which the trouble in this country in regard to public benefit traces its origin, will be placed in its proper historical perspective. That Act, as Judge Gavan Duffy stressed, neither codified the law nor superseded the common law of pious uses. Though the 1634 Act was repealed in full as long ago as 1879 it has, like its English counterpart of 1601, been too often regarded as the fons et origo of charity law, which it is not.
Section 47 will allow for the pooling of investments of charity funds. The High Court or the Board will, on the application of any two or more charities, be able to make schemes to establish common investment funds. Where a trust fund is small, it is not practical business for the trustees to obtain a wide spread of investment for the simple reason that the amount of work and expense involved are out of proportion to any increase in income that would result. However, if trust funds could be combined for investment purposes, a better range would be available; and each individual trust would fare better. The intention is to have a number of common investment funds established by schemes.
Section 48 will codify the existing law as to the cy-près application of charity funds, and also amend that law. Cy-près schemes are made by the High Court or the Board where there is a general charitable intention and it is found unlawful, impracticable or impossible to carry out the direction of the donor. I have earlier given the example of money left for the building of a church that has already been built. The existing law is defective in certain respects and these defects will be remedied by Section 48.
Subsection (1) sets out the circumstances in which the original purposes of a charitable gift may be altered to allow for cy-près application. Paragraphs (a) and (b) codify the existing law. Paragraph (c) relaxes the old rule requiring impossibility or impractibility and will allow conjunction of funds not only where that is the only possible or practical method of proceeding, but also where it is a more effective method of proceeding, though continuation in isolation be possible. Under existing law, there is no jurisdiction to direct a cy-près scheme where the mode of application specified by the testator is inexpedient or even harmful. If the charity can be administered according to the directions of the founder, it must be so administered. Paragraph (d) is designed to cover the case where the charitable purposes of a gift apply in respect of an area that has ceased to be a unit for some other purposes. For instance, the gift might be for the poor of a particular local government area that has been abolished and replaced by another area. The paragraph will also allow for cy-près application where the gift is for an area or class of persons that has ceased to be suitable or practicable. Thus, “unsuitability” is being substituted as the test instead of “impossibility”.
Paragraph (e) will permit cy-près application where there is adequate alternative provision, where the gift is for what has become an illegal or useless object, or where the original purposes have, in any other way, ceased to be a suitable or effective method of using the property. It is only in the case of an illegal or useless charity that the existing law allows cy-près application.
The object of subsection (2) is to make it clear that, before there is a cy-près application, the requisite condition (apart from failure of purposes) of general charitable intent must be fulfilled. Subsection (3) reproduces the existing law by providing that original purposes shall include alterations by scheme. Cy-près schemes are inherently subject to future schemes, and a cyprès scheme can fail, in the same way as the settlor's original scheme can fail.
Subsection (4) will impose on charity trustees a duty to keep their trusts effective by having the property applied cy-près. Trustees are legally bound to carry out their trust, and it is only reasonable that this obligation should include the duty of making a cy-près application, where that is necessary to give effect to the general charitable intention of the settlor.
So much for Section 48, which will apply to property given for charitable purposes, notwithstanding that it was given before the commencement of the proposed Act. Section 49 proposes to make property, that would not be applicable cy-près in the ordinary way, so applicable where the property would be the subject of a resulting trust in favour of the donors. The section will apply both to property given for specific charitable purposes and also to property given for specific non-charitable purposes. The necessity for the section arises because of difficulties which arise where anonymous and untraceable donations are given for a charitable or non-charitable purpose that fails. A usual type of case is that where money is subscribed through the medium of the collection box. Perhaps I should make it clear that Section 49 covers cy-près schemes where Section 48 does not apply. The latter section applies only where there is a general charitable intent or an out-and-out gift, and it is, of course, confined to charitable gifts. Where property is given for specific charitable purposes and does not exceed £1,000 in value, the Charity Commissioners will have jurisdiction to frame a scheme under Section 49. Their jurisdiction in regard to ordinary cy-près schemes under Section 48 extends to property up to £5,000 in value. This is by reason of Section 29. I might mention that, prior to 1844, the predecessors of the present Commissioners had unlimited cy-près powers.
Section 50 will provide for mixed trusts. Where a gift includes both charitable and non-charitable objects, it will be so construed and given effect to as to exclude the non-charitable objects. Accordingly, the property will be applied to the charitable objects alone. The Section is designed to apply to two types of case. First of all, it will apply to an imperfect trust provision that causes the gift to fail completely. The common example is a gift for "charitable or benevolent" purposes. Where a trustee has an absolute power of selection between the purposes, the gift fails. In the English case of Diplock in 1944, a testator left the residue of his estate "for such charitable or benevolent object or objects" as his trustees or executors should in their absolute discretion select. It was held, following a number of previous decisions, that the gift was void for uncertainty. Such a gift will in future be a valid charitable gift because of the provisions of Section 50. Secondly, the Section will apply to a gift that fails as a charitable gift but not as an ordinary gift. For instance, a gift to the College of Surgeons was in 1918 held to be a valid ordinary gift but not a valid charitable gift. The reason was that the College had two main objects, one charitable and the other non-charitable. Similarly, in a High Court case in 1945 a gift to the Carmelite Order was held to be invalid as a charitable gift (but valid as a non-charitable gift) on the ground that the purposes of the Order are not exclusively charitable. A charitable gift is not liable to legacy or succession duty and, where it involves a perpetual endowment, it is not void as offending the rule against perpetuities. Moreover, uncertainty cannot arise in the case of a charitable gift. A general charitable intention will be carried out by means of a scheme.
Where a donor or testator wishes to have his property applied to both the charitable and non-charitable objects of a particular body, there will be nothing in Section 50 to prevent his framing his gift accordingly. Subsection (2) specifically excludes from the ambit of subsection (1) those gifts in which an apportionment is made or provided for between the charitable and the non-charitable objects. From specific enquiries I made, I was quite satisfied that what I may call mixed charities would prefer to receive gifts free of legacy and succession duty, so that they would have to apply them to their charitable objects exclusively, rather than to receive them, less duty, when they could apply them generally. However, if a settlor intends that his bounty is to be applied to both the charitable and non-charitable objects of a mixed charity, he will, as I have indicated, be perfectly free so to frame his gift as to have his intention carried out.
Section 51 will make charitable a gift for a grave or memorial provided it does not exceed, in the case of a gift of income only, £60 a year, and, in any other case, £1,000 in amount or value. 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. There is no valid reason for distinguishing between a gift to provide or maintain a grave in a church and a similar gift in respect of a grave in the ground around a church or in a graveyard elsewhere. The section will, we hope, give practical effect to an old and deep human feeling that one's last resting place should be decently marked and suitably maintained.
Section 57 has been framed with the object of validating certain appointments that have been made of bodies corporate in place of two or more trustees. Section 10 (2) (c) of the Trustee Act, 1893, provides that "except where only one trustee was originally appointed, a trustee shall not be discharged under this section unless there will be at least two trustees to perform the trust." I have already referred to this matter in discussing Section 43. In future, the Board may, under that section, appoint a body corporate in place of two or more trustees. However, it is desirable to provide for the proper discharge of the original trustees where bodies corporate have in fact already been appointed. This is the object of Section 57.
I now come to the Schedule to the Bill. The repeals are in the main consequential. I should like, however, to refer in particular to one provision in the 1844 Act that is being repealed. The section is Section 16 of that Act, which provides that a gift of land for charitable purposes is ineffective if made within three months of the donor's death. The provision is peculiar to Ireland and has led to an amount of difficulty in its interpretation. We are well aware that there are good reasons for restricting the disposal of his property by a testator at the expense of his dependants, and this, whether or not the disposal is made in fear of death. However, we see no reason for a law which allows a person, where assets consist of stocks and shares, to give all to charity at any time before death, but which prevents him giving land or the proceeds thereof to charity if the gift, donation, devise or bequest is made within the arbitrary period of three months prior to his death.
This Bill had its origin in a Bill prepared by a Committee established in 1952 by the then Minister for Justice. The Committee consisted of the late Mr. W.E. Glover, former Chairman of the Board, the late Mr. Gerald F. McCarthy, former Director of the Statute Law Reform and Consolidation Office, Mr. P.P. O'Donoghue, former Principal Legal Assistant in the Department of the Attorney General, and Mr. J.S. Martin, Secretary to the Commissioners. That Committee did outstanding work and we owe them a debt of gratitude. The Commissioners themselves have always been unstinting in their assistance and advice and I should like once again to express thanks to them and to their indefatigable Secretary, Mr. Martin, for the help they have given in connection with the Bill. Finally, I wish to thank Professor Newark and Dr. Delany of the Queen's University of Belfast, who are both authorities in the often difficult and complex field of charity law and whose knowledge and views were always readily available to us.
The Bill before you is in many respects highly technical, and I trust that I have, in some measure, at least, been successful in my attempt at elucidation. If there are aspects of the Bill that are not clear from what I have said or from the explanatory sidenotes in the text, I shall do my best to explain them more fully at a later stage.