Summary

The objects clause of a trust set up for charitable purposes did not, by empowering the trust to do acts "conducive to" those purposes, mean that the trust could lawfully engage in purposes that were not wholly charitable.

Facts

A trust appealed against a judge's decision permitting the respondent commission to continue with an inquiry into its governance.

The commission had initiated its inquiry pursuant to the Charities Act (Northern Ireland) 2008 s.22, and its right to carry out the inquiry depended on the trust being a charity. The trust's rules described it as charitable, and its objects clause (rule 2) provided that it had the charitable objects of providing and managing housing for certain vulnerable persons. Rule 2 also conferred on the trust a power to "do all other things as are incidental or conducive to the attainment of [those] objects." The tribunal found that the trust was not, in law, a charity because, in accordance with its rules, it could lawfully engage in purposes that were not wholly charitable. In particular, it relied on the clause in rule 2 which empowered the trust to do things incidental or conducive to the attainment of its charitable objects. It found that the word "conducive" potentially empowered the trust to engage in activities that were not exclusively charitable. On that basis, it held that the trust was not subject to the jurisdiction of the commission. On appeal, the judge held that the trust had been established for charitable purposes only. He found that, on its natural and ordinary meaning, the phrase "to do all other things as are incidental or conducive to the attainment of the above objects" empowered the trust to do acts that facilitated its charitable objects, and did not allow it to branch out into non-charitable activities.

The trust submitted that the judge had erred in his interpretation of rule 2.

Held

The objects clause of an incorporated body such as the trust established the lawful powers beyond which it was not legally entitled to go. The rest of the rules had to be construed in a way that was compatible with the objects clause, and were therefore of no real help in determining the proper construction of the objects clause. If the objects clause imposed an exclusively charitable purpose, then any actions outside that purpose would be ultra vires. The trust accepted that the power in rule 2 to do acts "incidental" to its main objects could permit only acts that were compatible with its charitable objects. However, it argued that in permitting acts that were "conducive" to its charitable objects, rule 2 opened the door to activities going beyond its charitable objects, and thus permitted non-charitable intra vires activity. There was authority for the proposition that if an objects clause permitted acts that were, in the subjective view of that body's directors, conducive to the main purposes, then that would undermine the exclusively charitable nature of the body. Where the body's powers were expressed in entirely subjective terms it was impossible to require it to operate in an exclusively charitable manner, Oxford Group v Inland Revenue Commissioners [1949] 2 All E.R. 537 considered. However, where the powers were expressed in objective terms, it was clearly possible for the court to decide whether any given act was conducive to the body's charitable purposes. If the act in question undermined the body's exclusively charitable objects, then it could not be conducive to those objects and would thus be ultra vires. The question in the instant case was whether the power conferred by rule 2 could only lawfully be exercised in a way that was ancillary to the trust's charitable objects. That was a question of construction, Inland Revenue Commissioners v City of Glasgow Police Athletic Association [1953] A.C. 380 followed. Rule 2 had to be read as a whole, in the context of a set of rules which indicated a clear intention to create a charitable body. When read in that way, there was no doubt that the power to do acts conducive to the charitable objects was incidental to the trust's main purposes, which were clearly and exclusively charitable in nature. Rule 2 did not envisage the trust undertaking some activity inconsistent with its charitable purposes (see paras 27-34 of judgment).

Appeal dismissed