EQ T4

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1.1 Charities Act 2011 S1.1
A charity is an institution that is established exclusively for charitable purposes and is subject to the jurisdiction of the High Court
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1.2 Charities Act 2011 S9.3
A trust may be used as the mechanism for implementing a charitable purpose
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1.3 3 Requirements for Charitable Institutions
1.It must be established for a purpose that the law regards as charitable 2. Its purpose benefits the public, or a sufficient section of the public 3. It must be wholly and exclusively charitable
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1.4 Charity Advantages - Beneficiaries
No need for ascertainable beneficiaries – responsibility for enforcement is with the AG and Charity Commission
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1.5 Charity Advantages - Duration
Charitable trusts can exist perpetually and are not subject to the perpetuity rule. The rules of property vesting in charitable trusts however operate in the same way as private trusts (Re Lord Stratheden [1894]), and so have a 125 year limit -PoA S5
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1.6 Charity Advantages - Certainty of Purpose
sufficient that there is an intention to apply property for a charitable purpose (no need for reasonable certainty - Moggridge [1802] Also must be wholly and exclusively charitable, otherwise the trust will be void (IRC v McMullen [1981])
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1.7 Charity Advantages - Tax Advantage
relief from income and capital gains tax.
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1.8 Charity Advantages - Cy-pres + Reputational Benefits
Where a charitable trust fails, the surplus funds will be applied for another similar charitable purpose + reputation boost from charity
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1.9 Charity Advantages - Equality
limited exemption exists to adopt discriminatory charitable objects if can be objectively justified as a proportionate means of achieving a legitimate aim or are a means of compensating for a particular disadvantage (Equality Act 2010, S193 (2a))
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1.10 Charity Disadvantages - administrative and bureaucratic obligations
1. Must be registered by the Charity Commission 2. Part 8 of the Charities Act 2011 imposes strict duties on charity trustees to prepare annual accounts, to arrange for their audit, and to send annual reports to the Charity Commission
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1.11 Role of Attorney-General for Charities
responsible for enforcing the charitable trust in the name of the crown (Gaudiya Mission v Brachmachary [1998]). He or she acts as the protector of the charity and has been described as the representative of the beneficial interest (Weth v AG [1999])
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1.12 Charity Commission S13
general administrative duties, but also have a quasi-judicial function (Charities Act 2011, S13)
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1.13 Charity Commission CA S14
identifies various objectives of the commission including increasing public trust and confidence in charities, promoting compliance by charity trustees with their legal obligations, and promoting the effective use of charitable resources
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1.14 Charity Commission CA S15
Key general functions (from Section 15) include: determining whether or not institutions are charities, identifying and investigating misconduct or mismanagement, and maintaining a register of charities.
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1.15 Charity Register
names every charity other than those exempted by statute, or with low income of under £5K, and some exempted by the Commission with an income under £100K.
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1.16 Charity Register (S37.1)
A charity included on the register is conclusively presumed to be a charity (S37.1)
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1.17 Charity Register (S35.1)
Duty of the charity trustees to apply for registration (S35.1)
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1.18 Charity Register (S35.3)
Duty of the charity trustees to notify if the charity ceases to exist or change to trusts (S35.3)
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1.19 Scott v National Trust [1998]
Decisions of the CC may be examined by tribunals through Judicial Review proceedings, where the charity has the characteristics of a public body
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2.1 Heads of Charity
There are 13 descriptions of charitable purposes in the CA2011 (S3.1). The object of a charity must satisfy at least one of these purposes.
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2.2 Public Benefit Requirement (and S4.2)
Every charity must fulfil the public benefit requirement. rebuttable presumption of benefit for trusts involving the relief of poverty or the advancement of education and religion has been abolished (CA2011 S4.2)
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2.3 Independent Schools Council v The Charity Commission [2011]
The Charity Commission guidance has been required to produce guidance as to the interpretation of public benefit, but the validity was found wanting by the Independent Schools Council v The CC[2011], who stated they were ambiguous/wrong
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2.4 2 Aspects of Public Benefit Requirement
1. Identifiable Benefit 2.To The Public
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2.5 Public Benefit Requirement - Identifiable Benefit
The charity must provide a benefit that is capable of being recognised or described, but it need not be measured.
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2.6 Public Benefit Requirement - Identifiable Benefit - Re Grove-Grady [1929]
Beneficial: determined as a matter of law with reference to the head of recognised charitable purposes. Question of fact although not necessary to establish any consensus of opinion as to whether the purpose is beneficial
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2.7 Public Benefit Requirement - Identifiable Benefit - Aims
Benefit relate to the charities aims (and incidental benefits that are not related to the aim will be disregarded). Cannot give an incidental personal benefit.
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2.8 Public Benefit Requirement - Identifiable Benefit - Re Resch
Some indirect public benefit may be ok, for example, trust for private hospital relieves demands for beds in public hospitals
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2.9 Public Benefit Requirement - To The Public - General Rule
i.e cannot be a private group of individuals, such as the settlors friends.
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2.10 Public Benefit Requirement - To The Public - Public Class
Class of actual and potential beneficiaries must be a public class. Whilst it may be small, it cannot be numerically negligible.
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2.11 Public Benefit Requirement - To The Public - Location
Restrictions to an area must not be unreasonable. Fees do not render the charity automatically invalid, but for independent schools for example, scholarships etc must be available to those who cannot afford the fees.
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2.12 Bowman v Society Secular Ltd [1917] & McGovern v AG [1982]
Charities cannot pursue political objective & It will be considered political where its main purpose is of a party nature, or where it advocates or opposes a change in the law or policy, or decisions of central or local government authorities
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2.12 Ban on Political Charity Rationale
“law is politically neutral.” The court also cannot judge whether the proposed change will be for the public benefit, it would trespass the functions of the legislature, and the AG would not be appropriate figure to seek a change in the law.
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2.13 Section 3 Charities Act 2011
Charitable Purposes (see notes)
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3.1 CA 2011 S1.1 & Chichester Diocesan Fund v Simpson [1944] + Exception
All purposes must be charitable (CA2011 S1.1). No mixture of purposes allowed, will be void (Chichester Diocesan Fund v Simpson [1944]). Incidental purposes may not prevent the trust from being charitable (Latimer [2004]).
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3.2 Severance - Salisbury v Denton
where a trusts purposes are not exclusively charitable, it may be possible to divide the funds int0 parts. Only possible where the language of the trust instrument can be construed as directing such a division
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3.3 Severance - Re Coxen
recognised that severance will be appropriate whether the amount applicable to the non-charitable purpose can be quantified otherwise the trust will fail complete.
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3.4 Cy-près - Definition
Where a charitable purpose fails as it is impossible to apply funds for the intended charitable purpose, or because that purpose ceases to be charitable, the funds may be applied to a slightly different charitable purpose by virtue of cy-pres.
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3.5 Cy-près - CA 2011 S67
Where property is applied to the doctrine, the courts and the Charity Commission have the power to make schemes so that the property is allowed for a similar charitable purpose
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3.6 Cy-près - Application
Generally, the doctrine will be applied if the donor can be considered to have an intention that the property should be used for the benefit of charity generally rather than be confined to the particular charitable purpose.
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4.1 Initial Failure of Charitable Trusts - Re Faraker [1912]
The initial purpose must be impossible or impractical to fulfil. However, the purpose may exist elsewhere and be fulfilled there
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4.2 Initial Failure of Charitable Trusts - What makes trusts fail?
Where a bequest is intended to be for a particular charitable institution, rather than for the charitable purpose, and the institution has ceased to exist before testators death, there will be an initial failure of gift.
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4.3 Initial Failure of Charitable Trusts - Re Fingers WT [1972]
There is a distinction between a gift to a charitable purpose and a gift to an institution, influenced by whether the intended recipient of the gift is an unincorporated charity or not
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4.4 Initial Failure of Charitable Trusts - Re Rymer - General Charitable Intent
so long as the creator of the trust is more concerned that the funds are used for a charitable purpose generally rather than only a specific charity, cy-près will be applied. This will be identified from construction of trust documents and circums.
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4.5 Initial Failure of Charitable Trusts - Defunct or Non-Existent Charity - General Rule
depends on whether a general charitable intent can be identified, which may be influenced by whether the charity is defunct or never existed.
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4.6 Initial Failure of Charitable Trusts - Defunct or Non-Existent Charity - Re Hardwood
where the specific named charity didn’t exist, but this leads to credence for the decision that she had a general intent to help a specific cause.
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4.7 Initial Failure of Charitable Trusts - Defunct or Non-Existent Charity - Re Spence
it was noted if the identification of a specific charitable purpose led to a purpose that had failed, the bequest could not be applied to the doctrine.
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4.8 Initial Failure of Charitable Trusts - Defunct or Non-Existent Charity - Re Fingers
held that it was possible that if the charity had become defunct, whilst it was harder to find a justification for the doctrine, it was possible in these special circumstance
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4.9 Initial Failure of Charitable Trusts - Charitable by Association - Re Satterthwaites WT [1966]
if testator left money to a number of charities, and one doesn’t exist, the court will be willing to find a general charitable intention so the doctrine may apply. However, in Re Jenkins WT one of the trusts had a political purpose
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5.1 Subsequent Failure of Charitable Trusts - General Rule
Once a trust fund has been dedicated to a charitable purpose, the fact that that purpose then fails doesn’t destroy the charitable nature.
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5.2 Subsequent Failure of Charitable Trusts - Re Wright [1954
The courts will find a similar purpose and the fund transferred to it, regardless of whether the testator had a general or particular charitable intent
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5.3 Subsequent Failure of Charitable Trusts - Re Peels Release [1921]
The courts will find a similar purpose and the fund transferred to it, regardless of whether the testator had a general or particular charitable intent, (Re Wright [1954]), unless the trust instrument dictates the fund return to the residuary estate
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5.4 Subsequent Failure of Charitable Trusts - Re Slevin & Re King
It does not matter if the failure is before the vesting of the gift (Re Slevin). Cy-pres will also apply to a surplus of trust fund (Re King).
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Other cards in this set

Card 2

Front

1.2 Charities Act 2011 S9.3

Back

A trust may be used as the mechanism for implementing a charitable purpose

Card 3

Front

1.3 3 Requirements for Charitable Institutions

Back

Preview of the front of card 3

Card 4

Front

1.4 Charity Advantages - Beneficiaries

Back

Preview of the front of card 4

Card 5

Front

1.5 Charity Advantages - Duration

Back

Preview of the front of card 5
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