Philippe and others v Cameron and others (In the matter of St Andrew’s (Cheam) Lawn Tennis Club Trust)
Trust of land – Land held on trust for sale on terms permitting use by tennis club – Proceeds of eventual sale to be applied for various purposes including those connected to local church – Church seeking sale of land and application of proceeds for its purposes – Tennis club claiming trust invalid such that resulting trust arising in favour of members – Claimant trustees seeking determination of court as to beneficial ownership of land – Judgment given accordingly – Trust held to be invalid – Beneficial ownership held to lie with estate of original purchaser of land
Since 1938, an area of land in Cheam had been occupied by a tennis club, which was originally associated with a local church. The club land had been purchased by T, a member of the church, and leased to trustees; a 1938 trust deed declared the trusts on which the land was to be held. In 1948, the then trustees entered into an agreement with T to purchase the freehold for £525, payable in instalments, and with rent on the lease waived until completion of the purchase. The club paid the purchase price out of its general funds. T died in 1953. In 1955, his personal representative executed a transfer of the land to the trustees.
A dispute subsequently arose over the beneficial ownership of the club and the validity of the 1938 trust deed. The claimants, as the current trustees and one former trustee of the club land, brought proceedings under CPR 8 to seek clarification of the position.
Under the 1938 trust deed, the leasehold interest, and the freehold reversion if and when acquired, were to be held on a trust for sale, with power to postpone sale for so long as the trustees thought fit. Meanwhile, the trustees were empowered to let the land to the tennis club, or to permit it to be used rent-free as a tennis ground for persons associated with the church. By clause 8, any money arising from a sale under the trusts was to be applied in, inter alia: (i) purchasing a replacement sports ground; (ii) erecting any building to be used in connection with the church; and (iii) any other purpose in connection with the church that the trustees and the church’s committee of management should determine.
The first to thirteenth defendants, as the present trustees of the church’s charitable trusts, contended that the land should now be sold and the proceeds applied for the purposes of the church. The fourteenth to sixteenth defendants, as, respectively, the chairman, secretary and treasurer of the club, argued that the trust deed was invalid and that the land was consequently held on a resulting trust for the club members. The seventeenth to nineteenth defendants were the executor’s of T’s estate; they purported to renounce any interest they might have in favour of the church.
Held: Judgment was given accordingly.
(1) A valid trust had either to vest the trust property absolutely in ascertainable persons within the perpetuity period or be for exclusively charitable purposes. The 1938 trust deed was an attempt to achieve the legally impossible, namely a perpetual trust for a non-charitable purpose to enable the members of the club to play tennis. That position was unaffected by the fact that the deed created an immediate trust for sale with power to postpone the sale. The objects under clause 8, governing the proceeds of sale, did not give rise to a charitable trust. The power to use money to erect any building to be used in connection with the church could possibly be interpreted as limited to use for the purposes of the charity, but that power did not stand on its own. There was an additional power to use the sale proceeds for any other purpose in connection with the church and, given that non-charitable purposes might be connected with a church, the purposes were not limited to charitable purposes. A gift for purposes, some of which were charitable and some of which were not, would fail: Inland Revenue Commissioners v Baddeley [1955] AC 572 and Hunter v Attorney-General [1899] AC 309 applied. The trust was therefore invalid.
(2) The trust was not validated by the Charitable Trusts (Validation) Act 1954. By section 2(2), the Act did not apply to a disposition if, before 16 December 1952, property comprised in that disposition, or in another disposition made for the objects declared by the same imperfect trust provision, had been paid or conveyed to, or applied for the benefit of, the persons entitled by reason of the invalidity of the disposition. The “persons entitled” to which section 2(2) referred were not those whose entitlement arose from the invalidity of the disposition. Instead, the section described what had happened, and referred to persons who had received benefits because the disposition was invalid. The primary purpose of the 1938 trust deed was to benefit the club. If the trust deed were to be restricted to exclusively charitable trusts for the benefit of the church, then the club would be deprived of the benefit that it was intended to have, and that it had in fact enjoyed for more than 70 years. In those circumstances, whether or not T might have objected, the club would have legitimate grounds to object to an exclusively charitable application. It followed that the deed was not validated by the 1954 Act: Ulrich v Treasury Solicitor [2005] EWHC 67 (Ch); [2006] 1 WLR 33 considered.
(3) The invalidity of the trust deed did not give rise to a resulting trust in favour of the club members, by reason of the funding of the land purchase from the club’s general assets. The factual premise of such an argument was inaccurate. The purchase had partly been funded by a gift from T, so far as he had agreed to accept a price that was less than the land was worth, and less than he had originally paid for it, and had foregone rent until the purchase was completed. Further funding had come from partial gifts from lenders to the club, from people contributing to fund-raising activities for the purpose, and from subscriptions paid by club members. Gifts to an unincorporated association, such as a sports club, could take effect in a number of ways. Where the property in question was not to be at the disposal of the members for the time being, but was to be held in trust for or applied for the purposes of the association as a quasi-corporate entity, the gift would fail unless the association is a charitable body. The gift in the instant case fell into that category since the rules of the club prevented the members of from dividing the land or its proceeds between them, or from amending the rules without the consent of the church. The club was not a charitable body. Accordingly, the gifts failed: Neville Estates Ltd v Madden [1962] Ch 832 and In re Recher’s Will Trusts [1972] Ch 526 applied.
(4) The correct conclusion was that the land was held on a resulting trust for T’s estate. The trustees would not have acquired the land from T had he not made his generous offer in 1948. T also appeared to have been the largest single donor. T’s executors could not simply renounce their beneficial interest. They might wish to make a gift of the land to the church, but they should take tax advice first.
(5) If the trustees had breached their duty to the true beneficial owners of the land, they should be excused from liability for such breach, under section 61 of the Trustee Act 1925, since they had at all times acted honestly and reasonably.
Gilead Cooper QC (instructed by Henmans LLP, of Oxford) appeared for the claimants; Thomas Dumont (instructed by Farrer & Co) appeared for the first to thirteenth defendants; Gabriel Hughes (instructed by Christiane Warncke) appeared for the fourteenth defendant; the fifteenth to nineteenth defendants did not appear and were not represented.
Sally Dobson, barrister
Trust of land – Land held on trust for sale on terms permitting use by tennis club – Proceeds of eventual sale to be applied for various purposes including those connected to local church – Church seeking sale of land and application of proceeds for its purposes – Tennis club claiming trust invalid such that resulting trust arising in favour of members – Claimant trustees seeking determination of court as to beneficial ownership of land – Judgment given accordingly – Trust held to be invalid – Beneficial ownership held to lie with estate of original purchaser of landSince 1938, an area of land in Cheam had been occupied by a tennis club, which was originally associated with a local church. The club land had been purchased by T, a member of the church, and leased to trustees; a 1938 trust deed declared the trusts on which the land was to be held. In 1948, the then trustees entered into an agreement with T to purchase the freehold for £525, payable in instalments, and with rent on the lease waived until completion of the purchase. The club paid the purchase price out of its general funds. T died in 1953. In 1955, his personal representative executed a transfer of the land to the trustees.A dispute subsequently arose over the beneficial ownership of the club and the validity of the 1938 trust deed. The claimants, as the current trustees and one former trustee of the club land, brought proceedings under CPR 8 to seek clarification of the position.Under the 1938 trust deed, the leasehold interest, and the freehold reversion if and when acquired, were to be held on a trust for sale, with power to postpone sale for so long as the trustees thought fit. Meanwhile, the trustees were empowered to let the land to the tennis club, or to permit it to be used rent-free as a tennis ground for persons associated with the church. By clause 8, any money arising from a sale under the trusts was to be applied in, inter alia: (i) purchasing a replacement sports ground; (ii) erecting any building to be used in connection with the church; and (iii) any other purpose in connection with the church that the trustees and the church’s committee of management should determine.The first to thirteenth defendants, as the present trustees of the church’s charitable trusts, contended that the land should now be sold and the proceeds applied for the purposes of the church. The fourteenth to sixteenth defendants, as, respectively, the chairman, secretary and treasurer of the club, argued that the trust deed was invalid and that the land was consequently held on a resulting trust for the club members. The seventeenth to nineteenth defendants were the executor’s of T’s estate; they purported to renounce any interest they might have in favour of the church.Held: Judgment was given accordingly. (1) A valid trust had either to vest the trust property absolutely in ascertainable persons within the perpetuity period or be for exclusively charitable purposes. The 1938 trust deed was an attempt to achieve the legally impossible, namely a perpetual trust for a non-charitable purpose to enable the members of the club to play tennis. That position was unaffected by the fact that the deed created an immediate trust for sale with power to postpone the sale. The objects under clause 8, governing the proceeds of sale, did not give rise to a charitable trust. The power to use money to erect any building to be used in connection with the church could possibly be interpreted as limited to use for the purposes of the charity, but that power did not stand on its own. There was an additional power to use the sale proceeds for any other purpose in connection with the church and, given that non-charitable purposes might be connected with a church, the purposes were not limited to charitable purposes. A gift for purposes, some of which were charitable and some of which were not, would fail: Inland Revenue Commissioners v Baddeley [1955] AC 572 and Hunter v Attorney-General [1899] AC 309 applied. The trust was therefore invalid.(2) The trust was not validated by the Charitable Trusts (Validation) Act 1954. By section 2(2), the Act did not apply to a disposition if, before 16 December 1952, property comprised in that disposition, or in another disposition made for the objects declared by the same imperfect trust provision, had been paid or conveyed to, or applied for the benefit of, the persons entitled by reason of the invalidity of the disposition. The “persons entitled” to which section 2(2) referred were not those whose entitlement arose from the invalidity of the disposition. Instead, the section described what had happened, and referred to persons who had received benefits because the disposition was invalid. The primary purpose of the 1938 trust deed was to benefit the club. If the trust deed were to be restricted to exclusively charitable trusts for the benefit of the church, then the club would be deprived of the benefit that it was intended to have, and that it had in fact enjoyed for more than 70 years. In those circumstances, whether or not T might have objected, the club would have legitimate grounds to object to an exclusively charitable application. It followed that the deed was not validated by the 1954 Act: Ulrich v Treasury Solicitor [2005] EWHC 67 (Ch); [2006] 1 WLR 33 considered.(3) The invalidity of the trust deed did not give rise to a resulting trust in favour of the club members, by reason of the funding of the land purchase from the club’s general assets. The factual premise of such an argument was inaccurate. The purchase had partly been funded by a gift from T, so far as he had agreed to accept a price that was less than the land was worth, and less than he had originally paid for it, and had foregone rent until the purchase was completed. Further funding had come from partial gifts from lenders to the club, from people contributing to fund-raising activities for the purpose, and from subscriptions paid by club members. Gifts to an unincorporated association, such as a sports club, could take effect in a number of ways. Where the property in question was not to be at the disposal of the members for the time being, but was to be held in trust for or applied for the purposes of the association as a quasi-corporate entity, the gift would fail unless the association is a charitable body. The gift in the instant case fell into that category since the rules of the club prevented the members of from dividing the land or its proceeds between them, or from amending the rules without the consent of the church. The club was not a charitable body. Accordingly, the gifts failed: Neville Estates Ltd v Madden [1962] Ch 832 and In re Recher’s Will Trusts [1972] Ch 526 applied.(4) The correct conclusion was that the land was held on a resulting trust for T’s estate. The trustees would not have acquired the land from T had he not made his generous offer in 1948. T also appeared to have been the largest single donor. T’s executors could not simply renounce their beneficial interest. They might wish to make a gift of the land to the church, but they should take tax advice first.(5) If the trustees had breached their duty to the true beneficial owners of the land, they should be excused from liability for such breach, under section 61 of the Trustee Act 1925, since they had at all times acted honestly and reasonably.Gilead Cooper QC (instructed by Henmans LLP, of Oxford) appeared for the claimants; Thomas Dumont (instructed by Farrer & Co) appeared for the first to thirteenth defendants; Gabriel Hughes (instructed by Christiane Warncke) appeared for the fourteenth defendant; the fifteenth to nineteenth defendants did not appear and were not represented.
Sally Dobson, barrister
