Ipsofactoj.com: International Cases  Part 8 Case 14 [CAEW]
COURT OF APPEAL, ENGLAND & WALES
Imperial Cancer Research Fund
- vs -
LORD JUSTICE MUMMERY
LADY JUSTICE ARDEN
MR JUSTICE SUMNER
17 MAY 2001
Lord Justice Mummery
This is an appeal with the permission of the judge from an order made by HHJ Maddocks, sitting as a judge of the Chancery Division of the High Court at Liverpool on 17 December 1999. He held that a bequest of an equal third share of residue in clause 5(b) of the will of the late Clara Broadbent (Mrs Broadbent) has not failed, but is held on trust for the trustees of a Declaration of Trust dated 5 February 1913 (the 1913 deed)
.... to be held by them upon the trusts in clause (ix) thereof other than the alternative trust to apply moneys in such other religious or charitable purpose as the Trustees thereof shall in their absolute discretion think proper.
The order was made in proceedings brought by the National Westminster Bank as sole executor of Mrs Broadbent's will. By an Originating Summons dated 28 January 1999 the determination of the court was sought on the question whether the gift in clause 5 (b) failed and, if so, upon what trusts the share is held.
This appeal is by two research charities named as residuary beneficiaries in clause 5 (a) and (c) of the will. By virtue of an accruer provision they would be entitled to take the disputed share of residue in the event of its failure. They are the Imperial Cancer Research Fund and the Arthritis and Rheumatism Council for Research (now called the Arthritis Research Campaign.) Miss Sonia Proudman QC appears for them. The trustees of the 1913 deed are the respondents. They are represented by Mr Peter Smith QC.
THE WILL AND PROBATE
Mrs Broadbent made her will on 23 January 1987. After appointing the Bank as the sole executor and trustee of her will, she made a number of small pecuniary legacies and directed that the trustees should hold her residuary estate.
.... upon trust for the following charities in equal shares:-
AND I DIRECT that the receipt of the person appearing to the Bank to be the Treasurer or other proper officer for the time being of each of the above named charities shall be a full discharge to the Bank for the legacy given to that charity
AND I FURTHER DIRECT that should any of the charitable bequests in this clause fail the part so failing shall accrue to the remaining charity or charities and if more than one in equal shares
Mrs Broadbent made a codicil on 16 November 1992 revoking some of the legacies, but in other respects confirming her will. It is common ground that Mrs Broadbent's will and codicil are to be treated as one document bearing the date of the codicil: Re Reeves  1 Ch 351.
Mrs Broadbent died on 20 August 1996. Probate was granted to the Bank on 23 September 1996. The bulk of the estate falls into residue. The net value of the estate amounts to £1,142,514m, so that the two research charities stand to gain substantial sums if the gift in clause 5 (b) fails.
The following events have given rise to doubts about the validity of the gift in clause 5(b).
St Matthew's Church was formerly based in an iron framed pre-First World War building with asbestos cladding and a tiled roof. Its condition deteriorated over the years. The size of the congregation dwindled. In 1990 the trustees, in whom the building was vested on trusts declared in the 1913 deed, decided to close the church for worship and to sell it in exercise of an express power to do so in clause (ix) of that deed. There was a collapse in the property market and the contract for sale was not made until 5 July 1994. The sale price was £37,125. The building was subsequently demolished and the site was developed for residential purposes.
The proceeds of sale were received by the trustees of the 1913 deed, which declares the trusts of the charity affecting St Matthews Church, the church building and the proceeds of sale of the building. The deed is headed
DECLARATION OF TRUST
ST. MATTHEW'S STALYBRIDGE
The deed provided that the building erected on the plot of land, which had been acquired in December 1911, was to be used and occupied as a Church Mission Hall, Chapel of ease or other building for public religious worship and Sunday Schools in connection with the Church of England and for public meetings, social gatherings and other purposes of a like nature, but not for political meetings. The Minister, Lay Reader or other lay worker who should minister or exercise any function in the building was required to testify in writing to the Trustees
his attachment to the Protestant Evangelical Standards of the Church of England and that he will conduct the services in the said building with simplicity.
The pews had to remain unlet, free and unappropriated. The Trustees had power to receive any moneys contributed to any endowment fund for the building for its enlargement and repair and to invest. It was declared in clause (ix) that
.... the Trustees shall have power to sell the plot of land and the buildings for the time being erect and standing thereon or any part or parts thereof at any time if in their judgment it is deemed expedient or necessary so to do but so nevertheless that the proceeds shall either be applied in the purchase of another plot of land or the purchase or erection of another iron church or other buildings which when acquired shall be conveyed or transferred to the Trustees and shall be held by them upon the Trusts hereof or in such other religious or charitable purpose as the Trustees shall in their absolute discretion think proper.
St Matthew's is a Mission Church, not a parish church. It has no vicar or church wardens. It does not appear to have been consecrated, though it was accepted into the Church of England faith, as evidenced by a Sacrament of Confirmation and Service of Union conducted at St Matthew's Church by the Bishop of Chester on 8 September 1946. A Lay Reader was licensed on the same occasion. The Church was located in the parish of the nearby Holy Trinity and Christ Church.
Mrs Broadbent and her husband lived close to St Matthew's, which they had attended for many years. Mr Broadbent was a Sunday School teacher and was chairman of the trustees from 1977 until his death in 1986.
The two research charities contend that the gift in clause 5 (b) has failed. It is argued that the gift was only intended to take effect if St Matthew's was still functioning in the iron framed building at Mrs Broadbent's death. It had ceased to function in that building before she died. Mrs Broadbent was well aware that the building had been closed for worship and later sold. The gift could not take effect as the continued existence and use of that particular building was essential to its validity. The lapsed share accordingly accrued to the two other charities in equal shares.
These contentions, which were rejected by the judge, were skilfully developed by Miss Proudman QC in this court. She contended that a number of factors supported a construction of the gift which confined it to the work of the Church of England at, from and in the name of the specified existing building called St Matthew's Church. The essence of the argument was neatly encapsulated in the submission that this was a trust for premises, not for purposes.
The precatory provision for the upkeep of the fabric was relied on as an indication that Mrs Broadbent's mind was directed to aid for the work of the church, as conducted at and from a particular building, especially as she knew that the building was in a bad state of repair.
It was also contended that the accruer clause was included in the will in the knowledge that the church was likely to close as a result of dwindling congregations. It was said to indicate that Mrs Broadbent thought it necessary to make express provision for the eventuality that closure would occur and cause the gift to fail. It could only have been included to cover the possible failure of the gift to the church. Such a clause was not necessary in the case of the research charities.
Next, the trusts of the 1913 deed were inapplicable to this gift. Those trusts did not fit well with the expression " the general purposes" of St Matthew's Church in clause 5 (b). The trusts of that deed were principally concerned with the particular building. They could not be equated with the "general purposes of such Church." As her husband had been chairman of the trustees Mrs Broadbent knew of the existence of the deed . Yet she gave the share of residue to the "Vicar and Church Wardens," which indicated that she had the specific church building in mind rather than the trusts on which the proceeds of sale of it were held.
The cumulative effect of these points was that this was a gift to a particular institution at a particular place, which had closed and ceased to function in the lifetime of Mrs Broadbent. It failed for that reason. Alternatively, it failed even on the judge's construction of the will and the 1913 deed, which limited the trusts of the 1913 deed applicable to the share of residue to the "special trusts " for the building in the first limb of clause (ix). The evidence was that the activities specified in the first limb of clause (ix) were not being carried on by the trustees at Mrs Broadbent's death. The trustees did not originally contemplate establishing another church with the proceeds of sale. They resolved in principle to use the remainder of the proceeds for other purposes, such as the establishment of a chapel of prayer at a new local hospice. But since the death of Mrs Broadbent the trustees have located a possible site within the parish of Holy Trinity and Christ Church for the building of a replacement Mission Church in partnership with the Diocese of Chester to be funded by the Trustees' funds augmented by the residuary gift.
In my judgment, HHJ Maddocks was correct in holding that the gift in clause 5 (b) has not failed and that that share of residue should be paid to the trustees of the 1913 deed. I would dismiss the appeal , but I would vary his order by deleting the final words of the declaration, which exclude the application of "the alternative trust" in the second limb "limb B" of clause (ix) to the share of residue. Despite opposition from the appellants leave was given at the hearing to serve a respondents' notice out of time in order to contend for a variation of the judge's order.
The starting point is that the duty of the court is to ascertain and to give effect to the testamentary wishes of Mrs Broadbent. This is an exercise in construction. Her wishes are expressed in the language of the will, construed in the context of the circumstances in which she confirmed it in the codicil of 16 November 1992.
It was clearly not her primary wish that the whole of her considerable residuary estate should be shared between the two research charities alone. Her primary wish was that it should be divided equally among three existing named charities, one of which was St Matthew's Church. The crucial question is whether the closure of the church building for worship in 1990 and its sale in 1994 defeated her primary wish.
It is true that, as emphasised by the appellants, the "Vicar and Church Wardens" mentioned in clause 5(b) did not exist and have never existed ; that worship in the iron framed building ceased in 1990 ; that the building ceased to be available for church purposes after the sale in 1994 ; and that compliance with her precatory request that the money be used primarily for the upkeep of the fabric of that building is impossible.
In my judgment, these factors do not trigger the accruer clause in favour of the two research charities. The following points convince me that this gift has not failed.
In clause 5 the residue is divided equally among three existing charities. The two research charities present no problem. As for the share in clause 5 (b) the critical point is that there was and there still is in existence a charity for the general purposes of St Matthew's Church. It is the St Matthew's Stalybridge charitable trust established by the 1913 deed. The evidence discloses only one other charity for St Matthew's Church. That is a Declaration of Trust of 22 February 1921 made for the specific purpose of keeping the building in good and substantial repair. That charity was called the "St Matthew's Church, Stalybridge, Repairs Fund."
The gift in clause 5 (b) of the will is not limited to repairing the building. Indeed, it is not a trust solely for premises or even for religious or charitable purposes promoted in particular premises. The gift is not expressly or impliedly conditional on or otherwise tied to the existence, ownership or use of the particular building called St Matthew's Church.
The gift is "for the general purposes of such Church". There is more to those purposes than the use and upkeep of the building in which some of the activities and work of the Church take place. The precatory provision for the upkeep of the fabric highlights the fact that the trust obligation is for "the general purposes" of that Church, not simply for the particular building called St Matthew's Church.
As a general rule the purposes of a named church do not come to an end as a result of its building ceasing to be available for use in connection with the Church (e.g. if they are gutted by fire, an example given by Mr Smith QC in argument.) A church building may be closed up and pulled down, but the activities which further the general purposes of the church do not necessarily close down. In this case the spirit and intendment of the original benefactors and founders of St Matthew's Church are manifested in the charitable purposes promoted by the trusts of the 1913 deed, which include the broader trusts of the proceeds of sale in clause (ix). In my judgment, the trusts of the proceeds of sale answer the description of "the general purposes of such Church" in clause 5 (b) of the will. The trustees still hold the bulk of the proceeds of sale of the building. They are held on the trusts declared in clause (ix). Those funds are augmented by the share of residue.
It is clear that the closure and sale of the church building did not bring about a failure of the charity established by the 1913 deed. The trustees were granted an express power to sell the building. The exercise of the power triggered new charitable trusts. Since the sale in 1994 the trustees have held the proceeds for the exclusively charitable purposes declared in clause (ix). Those are general purposes of the church. That charity continues, even though the building used for its activities and work disappeared before Mrs Broadbent's death.
Differing from the judge, however, I see no justification for distinguishing between what he called two alternatives "limb A " and "limb B" of the trusts in clause (ix) or for confining the gift of residue to "limb A." Both limbs of clause (ix) apply to the proceeds of sale of the building thereby enabling the trustees to spend the whole or part of the proceeds on buying another plot on which to erect a church, or on buying another iron church or in their discretion for other religious or charitable purposes. These are collectively the "general purposes of such Church" to which the gift in clause 5(b) is bequeathed.
I would add that the gift may take effect in favour of the 1913 charity, even though neither it nor its trustees are mentioned by name in clause 5(b). The reference to "Vicar and Churchwardens" is clearly an inaccurate description of the persons responsible for the administration of the existing charity. The purposes for which they are to hold the money are exclusively charitable. A trust for a charitable purpose does not fail in consequence of a misdescription of the trustees.
The terms of the standard form receipt and accruer clauses are neutral on the issue of failure of the gift. In particular the accruer clause, which was specially relied on by Miss Proudman as a "strong pointer" in favour of the appellants' construction, cannot assist on the logically prior issue whether the gift has failed. It only covers the consequences of the gift failing.
The appellants derive no help from the precatory request as to the fabric of the building. If anything, that part of the gift highlights the fact that the gift is not a trust tied to particular premises, but is for "general purposes" which survive the closure and sale of the building.
The trustees of the 1913 deed are accordingly entitled to the share of residue bequeathed by clause 5(b). This result has been reached by an orthodox process of construction of Mrs Broadbent's will, as described earlier in this judgment, and without the need to rely on decisions of other courts on the effect of other wills. I should add, however, that the result is in line with the general approach to the construction of charitable bequests discernible in the authorities cited by Miss Proudman and Mr Smith.
As Wilberforce J indicated in Re Roberts  1 WLR 406 at 408, cases on gifts to named charitable institutions located at specific premises, which have gone before the gift takes effect, can give rise to difficult questions. Wilberforce J added at p.412-
.... the position is that the courts have gone very far in the decided cases to resist the conclusion that a legacy to a charitable institution lapses, and a number of very refined arguments have been found acceptable with a view to avoiding that conclusion.
The court's task is to identify in each case the charity which the testator really wanted to benefit by the bequest. This involves a careful examination by the court of the scheme and language of the will, the relevant surrounding circumstances and the events which have thrown the continued existence of the charity into doubt.
It appears from Re Roberts (supra) and similar cases, such as Re Rymer  1 Ch 19, Re Faraker 2 Ch 488, Re Withall  2 Ch 236, Re Lucas  1 Ch 425 and Re Slatter's WT  1 WLR 512, that the court must ascertain whether the intention of the testator was to benefit a charitable purpose promoted in the work of the named institution, as distinct from an intention to benefit only the named institution in the carrying out of its charitable purpose at or in connection with particular premises. This problem commonly arises in the case of bequests to a named college, school, hospital, or Home which, prior to the death of the testator, has closed down, moved, amalgamated, expanded or undergone some other potentially significant change, such as a scheme altering its objects. If, on examination of all the relevant material, the court is satisfied that the gift is for a charitable purpose which the institution existed to promote and there are existing funds dedicated to that purpose (to which the bequest can be added), the gift will not be allowed to fail simply because the particular institution used as a means of attaining the charitable end has ceased to exist.
On that approach and for the reasons already given, the share in clause 5 (b) is obviously given in augmentation of the funds already held by present trustees on the trusts of clause (ix) in the 1913 deed. The appeal should be dismissed. The cross appeal should be allowed to reflect the variation in the judge's order suggested earlier in this judgment.
Lady Justice Arden
Both counsel have argued this case skilfully and persuasively. As I see it there are three main issues, which must be considered in order. I gratefully adopt the summary of the facts in Mummery LJ's judgment.
The first issue is the "construction" issue. By Clause 5 of her will, Clara Broadbent directed that her trustees should hold her residuary estate:
upon trust for the following charities in equal shares:-
The evidence shows that St Matthew's Church, not being a parish church, had no Vicar or Church Wardens. In addition by the date of the testatrix's death, the church previously known as St Matthew's Church had been demolished and the site on which it had stood had been sold. There was no church to replace it. So the question arises, when the testatrix provided for a gift to the Vicar and Church Wardens of St Matthew's Church, did she mean the church as a building which had stood on a particular site in her lifetime, or did she mean the body of persons who had worshipped at the Church prior to its demolition? Miss Proudman submits that the testatrix's primary wish was that the money be spent on the upkeep of the fabric of the church. She submits that the expression "for the general purposes of such church" denotes purposes which are dependent on the existence of the physical building, such as the provision of flowers and bibles for the Church and the organisation, from the Church, of charitable activities. She relies heavily on Re Rymer  1 Ch 19 where a gift to St Thomas' Seminary failed because the seminary had ceased to exist and those who were trained at it had been moved to another seminary in Birmingham.
To decide the "construction" issue the Court must construe the gift to St Matthew's Church in its context in the will and in addition consider what the testatrix, sitting in her armchair, meant by the words that she used in her will: see for example Re Tepper's Will Trusts  Ch.358. The court endeavours to uphold the testamentary intentions of the testator in this situation if it is possible to do so. In addition, since the enactment of section 21 of the Administration of Justice Act 1982, the court has been able to have regard not simply to the surrounding circumstances but also to evidence of the testator's intention. On a textual approach to the will and without reference at this stage to evidence as to what the testatrix knew, significance must be attached to the fact that in Clause 5 the testatrix makes her gift to the specified "charities" rather than for the purposes of the actual building. This would suggest that she was desirous of making a gift to an institution that was separate from the physical building. On this basis, the gift would continue to be valid even though the physical building had ceased to belong to the charity by the date of her will (compare Re Roberts  1 WLR 406). As Wilberforce J pointed out in Re Roberts, above, at page 415, the decision in Re Rymer is one which turned on the special circumstances in that case and in particular on the meaning to be attached to the testator's words of gift when seen in the context of the will as a whole. Miss Proudman submits that the testatrix was obviously concerned with the fabric of the Church. This is so, but what is important is that the gift was not exclusively but only primarily for the fabric of the Church. Moreover if the legatee is properly the institution separate from the physical building there is nothing to require the general purposes of the Church to be restricted to activities which are dependent on it.
The will contains an accruer clause which provides that if a gift failed it should vest in the other residuary legatees. In my judgment this clause is neutral since any one of the charities who were residuary legatees might fail, and it does not matter that this risk was theoretical rather than real in the case of the legatees other than St Matthew's Church. In addition, the language of the accruer clause contemplates the occurrence of an event after the date of her codicil (see Re Reeves  Ch.351).
The conclusion which I have thus far reached on the wording of the will is confirmed by the evidence as to what the testatrix, sitting in her armchair, meant by Clause 5 of her will. At the date of her codicil, the testatrix knew that the Church had been closed and so she cannot have intended that the gift should not go to the Church simply because the Church had been closed.
I do not consider that significance is to be attached to the fact that the gift was made to the Vicar and Church Wardens. This was an understandable mistake since gifts to churches are normally made in this way and St Matthew's Church was unusual in having a separate trust. This is so even though Clara Broadbent's late husband had been chairman of the trustees some years earlier. The words "Vicar and Church Wardens" cannot make the gift one to a physical building and no party has suggested that this gift was for the purposes of the Church of England generally.
I accordingly conclude, on the first issue, that the effect of the will is that the gift should go to the body of persons who constituted St Matthew's Church. This is subject to the second main issue considered below.
The second main issue is the "cesser" question. This is not a question of looking at the matter as the testatrix, sitting in her armchair, would have done. The law draws a line in at the date of the death of the testatrix. The principle was summarised thus by Evershed MR in Re Tacon:-
It is well established that in the case of a gift to a charity (ie, to some body of persons or organisation admittedly charitable) where no general charitable intention is present, then
In these respects the "charity" is assimilated to an ordinary individual legatee. The same principles apply to a gift, not to a named charity, but for some (admittedly) charitable purpose where (again) there is no general charitable intention. Such a gift will wholly fail if the purpose is either so vague or uncertain or so impracticable that the court cannot execute it. The test of vagueness or uncertainty or impracticability is to be applied at the date of the testator's death; if at the date the disposition is shown to be impracticable (confining myself henceforth to that case) - that is, incapable for any reason of being practically initiated or administered - then the gift fails altogether and the next-of-kin (or whoever else are entitled in default) take. Per contra, if the charitable gift is not then shown to be "impracticable", the next-of-kin or other interests are for ever excluded even though later supervening events defeat the precise purpose contemplated by the testator.
In this case the gift in Clause 5(b) was to a specified charity not simply for a charitable purpose. The evidence shows that the Church had not ceased to exist at the date of the testatrix's death. There was still a congregation, albeit small in number, who used to meet for the purposes of prayer and the trustees held part of the proceeds of the sale. Miss Proudman's submission is that there were not enough assets to rebuild the Church and hence the testatrix's gift failed. However, as the passage cited above from the judgment of Evershed MR in Re Tacon shows, in the case of a gift to a charity, the availability of funds is not the test. The question is whether the charity has ceased to exist before the will comes into operation. That means that it has to be shown that there was an exhaustion of assets and a cessation of activities (see generally Re Faraker  2 Ch 488, Re Lucas  Ch.424 at 426-7, and Re Roberts, above).
Even if, prior to the testatrix's death, the trustees of the Church had decided to give all the assets to another cause under Clause 9(b) of the 1913 Trust Deeds, this would not mean that the charity had ceased to exist as soon as that resolution was passed. As the Judge points out, that resolution was capable of being revoked. The power to make a distribution under Clause 9(b) of the 1913 Trust Deed is a fiduciary power and the trustees could not fetter their discretion by agreeing to exercise their powers in a particular way and could and should review their exercise if there was a change of circumstances. That change of circumstances in this case was the death of Clara Broadbent and the publication of her will in which she made this substantial residuary gift to St Matthew's Church.
The third question is that raised by the respondent's notice. It relates to clause (ix) which is set out in the judgment of Mummery LJ. The position that I have reached so far is that Clara Broadbent made a gift to St Matthew's Church as an institution and not as a physical building. On that basis, Clara Broadbent made a gift to the trustees of the 1913 Deed. Since those trusts all constitute St Matthew's Church - see in particular the heading to the trust deed - there is in my judgment no distinction to be made, as the Judge thought, between the two limbs of the trust of the proceeds of sale in clause (ix). Clause (ix) controls a situation in which the site on which the Church was originally built is sold and proceeds of the sale were held. The natural meaning of clause (ix) in my view is to give to the trustees in that event the power to decide whether to apply the proceeds of sale in whole or part in the purchase or erection of a new church and in addition the power to apply the proceeds not so used for other religious and charitable purposes as they think proper. The Judge referred to the latter trusts as the Limb B trusts. Had the site been sold for a sum much greater than was reasonably required to rebuild the Church, the trustees of St Matthew's Church may have considered it part of their function to give money to religious or charitable purposes (Limb B) rather than to retain it. Both limbs of clause (ix) are the trusts on which the assets subject to the trusts are held. Accordingly it is not appropriate for the Court's order to provide, as in the Judge's order, that the Limb B trusts should not apply to Clara Broadbent's bequest.
For all these reasons and for those given by Mummery LJ, whose judgment I have read in draft, I consider that the appeal must be dismissed and the cross-appeal allowed.
Mr Justice Sumner
I agree with both judgments
Re Reeves  1 Ch 351; Re Roberts  1 WLR 406; Re Rymer  1 Ch 19; Re Faraker 2 Ch 488; Re Withall  2 Ch 236; Re Lucas  1 Ch 425; Re Slatter's WT  1 WLR 512; Re Tepper's Will Trusts  Ch.358
Sonia Proudman QC for the Appellant (instructed by Denton Wilde Sapte)
Mr Peter Smith QC & Mr Mark Halliwell for the Respondents (instructed by Hayton Winckley)
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