Neutral citation number: [2010] EWHC 3785 (Ch)
Case No:  HC09C01542
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL

Date: Wednesday, 14 July 2010

BEFORE:

HIS HONOUR JUDGE HODGE QC
sitting as a Judge of the High Court

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BETWEEN:
	ALEXANDER GEORGE CUPPAGE 
CHRISTOPHER ROBERT ATTEWELL 
CHRISTOPHER MAJOR RUSSELL	

Claimants	
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	RICHARD LAWSON 
ROBERT LEIGH CHIGNELL 
HER MAJESTY’S ATTORNEY GENERAL	

Defendants	

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MR THOMAS DUMONT (instructed by DMH Stallard LLP) appeared on behalf of the Claimants

MR GRANT CRAWFORD (instructed by Pearless de Rougemont) appeared on behalf of the First Defendant

MR PIERS FELTHAM (instructed by Simons Muirhead & Burton) appeared on behalf of the Second Defendant

MR WILLIAM HENDERSON (instructed by Treasury Solicitor) appeared on behalf of the Third Defendant
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Judgment

1.	JUDGE HODGE QC:  This is my extemporary judgment in the case of Alexander George Cuppage and two others as claimants and Richard Lawson and two others as defendants, claim number HC09C01542.  The issue before the court is the beneficial entitlement to the proceeds of sale of land and buildings which formerly comprised the site of the former East Grinstead Social Club, previously the East Grinstead Working Men’s Club.  The property was situated at Queens Road, East Grinstead in the County of West Sussex.

2.	Due to a change in social and economic conditions brought about, in part, by increased competition from commercial establishments in East Grinstead, the club had closed for business, after more than 100 years, on 29 April 2006.  Little more than a year later, on 29 May 2007, the site was sold for £820,000 to a developer, who demolished the buildings with a view to the development of the site for housing.

3.	The claim raises interesting questions, of potentially more general application, as to the true meaning and effect of both the Charitable Trusts (Validation) Act 1954 and the Recreational Charities Act 1958 prior to the amendment of the latter Act by the Charities Act 2006.  The relevant amendment served to eliminate an inbuilt element of sexual bias in the original provisions of the 1958 Act which was directed to institutions with an all male membership.

4.	The claimants are the present trustees of the trusts declared by a declaration of trust dated 1 June 1907.  During the course of these proceedings, it emerged that there was an earlier declaration of trust dated 21 November 1898.  However, since both the trustees under, and the operative terms of, both instruments were, for all relevant purposes, identical, it is common ground that this complicating fact can be ignored.  For ease of reference, I shall refer throughout this judgment to a typed transcript of the 1907 Declaration of Trust.

5.	The old working men’s institution that became known eventually as the East Grinstead Social Club can be traced back to October 1894, when the Reverend RB Matson and other public spirited ladies and gentlemen (I use that expression advisedly) who were residing in and around East Grinstead opened a working men’s club and reading room.  The first reported balance sheet of the working men’s club, dated August 1895, was presented by the Reverend RB Matson, who was therein described as the founder of the club.

6.	That report and balance sheet is before the court, although it is not formally before me in evidence.  It affords relevant evidence as to the origins and purposes, and also the flavour, of the club.  I shall therefore read it in full.  It begins:

“East Grinstead, August 1895.  Ladies and gentlemen.  Having, in answer to my request, kindly entrusted me with money to open a working men’s club and reading room during the past winter months, I think it right to inform you what has been done.  
We obtained a room and furnished it very plainly.  The number of members paying a shilling per quarter was over 120 for the first quarter.  This number, as was expected, dropped to 90 for the second quarter.  They were often 50 members present at one time in the rooms.
There were some smoking concerts and a magic lantern entertainment, the latter being kindly arranged by Mr A Clark: at these meetings about 70 were present, and they were much appreciated by all and were well conducted.  A lecture on “The circulation of the blood” with diagrams was kindly given by Dr Harrison, a concert by Mr R Chignell and the Misses Chignell; and an entertainment by the boys of the Modern School.  The members often expressed their appreciation of these events and to the last two they were requested to bring their lady friends: on both these occasions, they filled the Victoria Hall.  Of course, in starting this work there were difficulties but taking one consideration with another the work has proved a happy one.  
It may be asked what was being done?  The answer is - very much and very little:
(1) There is a place (but not very warm) of resort and amusement and reading with work done before the winter.
(2) The large numbers present with so few attractions and many unfavourable circumstances showed that the work was wanted and, humble as it was, it was duly appreciated.
(3) It kept many from spending too much money elsewhere.
(4) It was an object lesson that the workmen of this town greatly desire chances of healthy, inexpensive amusement and some influence to raise them intellectually and rationally.
(5) By tournaments with surrounding villages a healthy and friendly rivalry was created.
(6) Men out of work found the Club a great benefit.
(7) It has been a means of promoting thrift - a Slate Club or Sick Benefit Club has been formed in connection with the members.
(8) It has also been another means of showing that there are ladies and gentlemen around East Grinstead who have an interest in the elevation of their fellow creatures and are ready to help them work.  May it go on.
The club was started quite informally on October 1st last year.  Mr Murchison kindly became president, Mr R Chignell treasurer and myself acted as secretary and a committee of management was chosen by the men.  Owing to a severe attack of erysipelas fever in March this year, I have, with much reluctance, been compelled to resign for the present all work beyond what comes as my first duty.  I did hope to carry this on to a successful issue.  It must be left to others who have more time and better health and powers of influence than I.
Other villages around are better off than East Grinstead in this respect, e.g. Ashurst Wood, Crawley Down and I fancy even at Saint Hill, Mr Crookshank has started a working men’s reading room.  
I thank those who enabled me to make this six months start and I hope they have had evidence that the work was a worthy one and ought for many reasons to be established on a permanent basis.  I must also appear thankful to the men, and especially the committee, for the hearty response they made to help the work.  I am your faithful servant.  RB Matson.”

7.	Then there is written, in manuscript, “the founder of the club”.  There follows a balance sheet of the working men’s club from 1 October 1894 to 31 March 1895.  Receipts and expenditure balance, and there is some £43.2s.11d.  There is then a list of the chief donations made: Mr Murchison gave £5, Professor Cruickshank £2, and various named individuals gave £1 each, a number of individuals gave 10s each, and the Reverend RB Matson gave £3.

8.	On 17 December 1896, land was conveyed to the three original trustees together with a fourth gentleman who, unhappily, died before the 1898 declaration of trust.  The purchase price for the land was £485, which was paid by the purchasers out of the monies belonging to them on a joint account.  A building was constructed on the land for the purposes of the club.  The 1907 Deed of Trust records that the total cost of the land and buildings was £2,576, with £1,000 being raised on mortgage and the balance being met out of contributions made by the trustees and various other unidentified persons.

9.	It is appropriate at this point to set out the relevant provisions of the 1907 Deed of Trust.  The back sheet reads, “The Working Men’s Club, East Grinstead - Declaration of Trust”.  After several recitals relating the history of the purchase and the construction of the working men’s club, the operative provisions begin by providing (in clause 1) that the expression “the trustees”, where thereinafter employed, should be deemed to mean and include the purchasers and the survivors of them and others the trustees of these presents.   I shall read clauses 2 through to 7 in full:

“(2) The trustees shall hold the said land and the buildings erected thereon (subject to the said mortgage and the principal and interest due thereunder) and all monies to arise from the exercise of the power of sale, exchange, mortgage and lease hereinafter contained and the hereditaments, investments or other property acquired with or for time being representing such monies and any rents, profits and income arising from the sale (hereinafter called “the trust property”) upon the trust’s purposes and powers hereinafter expressed.
(3) The trustees shall during their pleasure permit the lands comprised in the recited conveyance and the buildings to be erected thereon to be used for the purposes of a working men’s club so long as such club is, in their judgment, carried on without loss and so conducted to their satisfaction.
(4) The trustees may from time to time make rules for the regulation and management of the said club and for defining the persons and the particular purposes by whom and for which the club premises shall be used and the terms and conditions upon which the same shall be used.
(5) The trustees may from time to time repeal, rescind, extend or vary any such rules as aforesaid.
(6) The trustees shall have power to deal with the trust property as beneficial owners thereof and to sell, let, mortgage or exchange the lands and buildings comprised therein or any part thereof respectively at their discretion and to invest any monies coming into their hands free from any restrictions as to the nature of such investments.
(7) If the trustees shall at any time hereafter determine by unanimous resolution that in their opinion the club cannot be usefully and beneficially maintained and kept open, the trustees shall thenceforth hold the trust property upon such trusts as they may from time to time declare by any Deed Poll to be executed by them (which might vary, extend or enlarge the provisions of these presents and may in their judgment tend to the welfare of the working population of East Grinstead).”

10.	Clause 8 confirms and extends the power of appointment of new trustees which was then contained in section 10 of the Trustee Act 1893.  The final clause, clause 9, provides as follows:

“Notwithstanding anything herein contained the trustees shall have power by unanimous resolution to determine the trusts declared by these presents or by any subsequent deed if in their judgment it shall become expedient to do so and in that event they shall hold the trust property upon trust for the persons who contributed the original funds in the proportion of their respective contributions.”

11.	I accept the inference which Mr Henderson, counsel appearing for the third defendant, invited me to draw, without any objection from any of the other counsel, that in declaring these trusts (which reproduced almost verbatim the earlier 1898 trusts) the trustees were acting with the knowledge and the authority of all their fellow contributors.

12.	On 8 May 2009, the three claimants, the present trustees, issued a part 8 claim form in the Chancery Division of the High Court.  They claim a declaration as to the trusts and powers pursuant to which the claimants hold the net proceeds of sale of the former East Grinstead Working Men’s Club.  They also seek all appropriate inquiries or representation orders, any necessary charitable scheme, directions for the same, further or other relief, and that provision may be made for the costs of the application.

13.	The details of the claim record that the claimants are the trustees of the 1907 Declaration of Trust pursuant to which they held the premises occupied by the East Grinstead Working Men’s or Social Club.  The details record that the club had ceased to function and the premises had been sold.  The claimants therefore seek a determination whether, upon the true construction of the 1907 Declaration of Trust, and in the events which have happened, they hold the net proceeds of sale (a) upon such trusts as the court might declare for the welfare of the working population of East Grinstead, (b) upon trust for the persons who contributed the original funds for the purchase and/or construction of the Queens Hall, (c) upon charitable trusts and, if so, for what charitable purposes, or (d) upon some other and, if so, what trusts.

14.	The defendants also seek an inquiry as to who were the original contributors to the purchase of the premises and/or the construction of the building thereon, all necessary representation orders, including an order that the first defendant do represent the members of the East Grinstead Working Men’s or Social Club and that the second defendant do represent the heirs and assigns of the original contributors to the purchase and/or construction of that premises.  In the event that it was declared that the net sale proceeds were held upon charitable trusts, there is a claim that the court should direct a scheme for such trusts.

15.	The claimants are represented before me by Mr Thomas Dumont of counsel.  Evidence in support of the claim is contained in the first witness statement of the third defendant, Mr Christopher Major Russell, dated 30 April 2009.  In addition to being one of the three trustees, he is also a solicitor with the firm of DMH Stallard LLP, the claimant’s solicitors.  Mr Russell later filed a second, and shorter, witness statement, dated 27 April 2010, in response to the evidence filed on behalf of the first defendant.

16.	Useful background material is contained in Mr Russell’s first witness statement.  Having set out the history of the purchase of the land and the building, at paragraph 6 Mr Russell refers to the trust declared by clause 3 of the declaration.  He explains that, in more recent years, the club came to be known as the East Grinstead Social Club.  He explains that the club catered for the working people of East Grinstead, and that it was run successfully in financial terms until the late 1980s or early 1990s.

17.	Until the 1980s, the association which ran the club is said to have had a strong and active membership, with members prepared to stand for office and to put in a lot of effort.  They were able to buy beverages more cheaply than in local commercial venues; but in the 1990s East Grinstead saw an influx of a large number of chain public houses and wine bars.  They were able to supply alcohol at prices with which the club could not compete.  As a result, the club’s membership dwindled and it lost, in particular, members prepared to become club officers, and to put in the time needed to bring about a recovery in difficult commercial circumstances.

18.	Although the club’s premises did have a function room, for a variety of reasons the functions became fewer and income from it dropped.  Nor did the club have the facilities to cope with the competition from public commercial venues which could screen sporting events on television.  As a result, trading ceased on 29 April 2006.

19.	Paragraph 8 explains that the club itself was a separate entity to the trusts upon which the premises were held.  Although the declaration of trust provided (by clause 4) that the trustees might from time to time make rules for the regulation and management of the club, so far as Mr Russell was aware, no such rules were ever made.  As trustees, the claimants were not involved in the club itself.  He exhibits the club’s own constitution and rules; and he explains that when the club ceased to function, it had certain debts to which the trustees have not contributed.

20.	He explains that, over the years, the club used some of its own funds to make what he describes as relatively small improvements to the property, such as disabled access, and paid for some decoration.  He says that he regards it as wholly unlikely that any such expenditure would have added anything to the sale price.  He indicates that the building has now been demolished, and will be replaced with a block of flats.

21.	In his second witness statement, at paragraph 6, Mr Russell relates that, having recently discussed the sale of the property with the selling agents that acted on behalf of the trustees, whilst the property was on the market it attracted attention only from two developers, both of whom wished to demolish it.  The selling agent advised Mr Russell that, even if the property had been in prime condition, this would not have enhanced the selling price.

22.	Originally, there were five named defendants; but by an order of Master Teverson, made on 26 November 2009 and sealed on 17 December that year, the second and fourth defendants, who were The Friends of Truro Cathedral and Charles Cruickshank, ceased to be parties to the proceedings.  The first defendant was appointed to represent all members or former members of the East Grinstead Social Club, formerly Working Men’s Club, who were not represented by the now second defendant.

23.	Four witness statements were filed on behalf of the first defendant.  There were witness statements from Mr Michael John Bish dated 26 January 2010, from Mr Peter George Maber dated 5 February 2010, from Mr Richard Lawson (the first defendant) dated 20 April 2010 and, finally, from Mr Barry Lionel Yates also dated 20 April 2010.  The first defendant was represented before me by Mr Grant Crawford of counsel.  For reasons which it is unnecessary for me to go into, Mr Crawford accepts that there is no basis in law or in equity upon which the members, or the former members, of the club can assert any beneficial entitlement to any share in the proceeds of sale of the land and buildings.  I am entirely satisfied that Mr Crawford is justified in adopting that position.

24.	Looking at the detailed research and thought that has gone into Mr Crawford’s written skeleton argument, I have no doubt that he has given his client’s position anxious consideration.  I am entirely satisfied that he was right to conclude that there is no respectable argument that he can advance on behalf of his client and those represented by the first defendant.  As Mr Crawford accurately put it in the course of his oral submissions, his clients would be claiming against the trusts, rather than under them, in seeking to advance any claim to the sale of proceeds.

25.	By Master Teverson’s order, the second defendant was appointed to represent the estates of the original three trustees and the estates of all other persons who had contributed the original funds as mentioned in the 1907 Declaration of Trust and all persons claiming under or through those estates.  The second defendant is represented before me by Mr Piers Feltham of counsel.  The third defendant is Her Majesty’s Attorney General.  He has been joined to represent the interests of charity, and is represented before me by Mr William Henderson of counsel.

26.	Paragraph 4 of Master Teverson’s order required the claimants to inform the respective secretaries of two other local institutions, the East Grinstead Literary and Social Club and the East Grinstead Ex-Services Club, by letter of these proceedings, enclosing the third claimant’s witness statement with exhibits.  In the event, neither of those two institutions have chosen to take any part in these proceedings, or to make any representations to the court in support of any entitlement on their part to any share from the sale proceeds.

27.	Another potential interested party was the Bona Vacantia division of the Treasury Solicitor’s office.  Although informed of these proceedings, the Bona Vacantia division has taken no part in them.  The reason is set out in a letter of 19 November 2009 to the claimant’s solicitors.  So far as material, the writer states his view to be that the only possibility of a Bona Vacantia division interest in the matter under English and Welsh law would be if the trust failed entirely, and the trust funds passed to the Crown as common law bona vacantia, as in the case of Re West Sussex Constabulary’s Widows, Children and Benevolent (1930) Fund Trusts, Barnett v Ketteringham and Others [1971] Ch 1.  The letter continues:

“However, that does not appear likely in this case as the trust includes a saving clause at clause 9 that allows the trustees to determine the trust and hold the money on a resulting trust for the original donors.  That clause also seems to indicate that it was not envisaged that the original donors were to part with their money absolutely in setting up the trust.  That would also indicate that in the event that the trust failed the money should not pass as bona vacantia but would instead be held on resulting trust for the original donors.”

28.	No one has taken issue with that analysis.  In the result then, the contest before the court has been between, on the one hand, Mr Feltham for the original contributors of the finance which was applied in the purchase and building of the club and, on the other hand, Mr Henderson on behalf of charity.  The ascertainment of the identities of the original contributors, the identification of their successors, and the quantification of the extent of their individual entitlements, if any, are not issues before the court today.

29.	At the invitation of the court, Mr Henderson addressed his oral submissions to me first on behalf of charity, with Mr Feltham following with his submissions on behalf of those claiming under a resulting trust.  Mr Henderson briefly responded; and Mr Dumont, on behalf of the claimants, was allowed to make certain closing observations.  There is an element of common ground between Mr Henderson and Mr Feltham.  It is, I think, common ground that the trusts declared by the 1907 Declaration of Trust cannot be upheld or supported as valid trusts unless they are charitable.  That is because they are plainly perpetuitous.  I mention that the relevant trust instrument predated the 1964 Perpetuities and Accumulations Act.

30.	Secondly, it is, I think, common ground that the trusts declared by clause 3, and any interest arising under clause 7, of the declaration of trust cannot be supported as valid charitable trusts for the relief of poverty amongst the population of East Grinstead without resort to the provisions of the Charitable Trusts (Validation) Act 1954.  The reason for that is that, on their face, the objects declared by the 1907 deed are not exclusively charitable.

31.	The trusts so declared will only be valid as charitable trusts if either (a) their objects can be confined by the operation of the 1954 Act to the belief of poverty amongst the population of East Grinstead or (b) they can be saved by the operation of the Recreational Charities Act 1958 in its original form.  Mr Henderson says that the trusts are indeed validated by the 1954 Act and/or are saved by the 1958 Act.  Mr Feltham denies that such is the case.

32.	Mr Henderson also accepts that if the trusts declared by clause 3 are invalid as charitable trusts, then the power created by clause 7 cannot stand on its own.  That is because a charitable power cannot be validly exercised outside the perpetuity period unless all preceding interests are themselves charitable.  He acknowledges that, in order for him to succeed in upholding the clause 7 power as charitable, he must first succeed in establishing the charitable character of the clause 3 trust.

33.	He must do so because one cannot have a non-charitable trust that may exist for an indefinite period, even if it is followed by a charitable gift.  Mr Feltham accepts, for his part, that the clause 9 power is itself void for perpetuity; but he says that, on that basis, there is a resulting trust for the original contributors.

34.	I proceed to set out the respective arguments more fully.  Mr Henderson, on behalf of the Attorney General, argues first that clause 3 is saved by the 1954 Act.  He acknowledges that it is far easier to apply the 1954 Act to the wording of clause 7 than it is to the wording of clause 3.  The focus of his submissions was therefore directed to the application of the 1954 Act to clause 3.  The thrust of his submissions was that the trustees would not have been acting in breach of duty in confining the use of the working men’s club to one that was charitable because its activities were being confined to those working men who were poor or in necessitous circumstances.

35.	He cited and relied upon the decision of the late Hart J in the case of Ulrich v Treasury Solicitor [2005] EWHC 67 (Ch), reported at [2006] 1 WLR 33 for the proper approach to the application of the 1954 Act.  He also cited the decision of Sir Robert Megarry V-C in the case of Re Niyazi’s Will Trusts [1978] 1 WLR 910 for the meaning of the phrase “working men”.

36.	Secondly, and alternatively, Mr Henderson suggested that the clause 3 trust was validated by section 1 of the Recreational Charities Act 1958.  He only needed to rely upon that Act if the court had rejected his submission that clause 3 was saved by the 1954 Act.  On that hypothesis, Mr Henderson would not have been able to rely upon the provisions of section 1(2)(b)(i) of the 1958 Act because the objects of clause 3 could not be said to have had need of the relevant facilities by reason of poverty or social and economic circumstances.

37.	On that hypothesis, it was therefore necessary for Mr Henderson to rely upon the alternative provisions of section 1(2)(b)(ii) that the facilities should be available to members of the public at large.  It was therefore necessary for him, if he was to rely upon the 1958 Act, as an alternative to the 1954 Act and his primary submission, to establish that the trustees ought to have been entitled to make the facilities available to members of the public at large.  In other words, not to confine the activities of the working men’s club and its membership to working men only.

38.	In connection with that argument, Mr Henderson cited to me an extract from Picarda:   The Law and Practice Relating to Charities, 3rd edition (1999), at page 139 where the point is made that a club which is simply a club for men will not be registered as a charity, and to a number of decisions of the Charity Commissioners recorded in their 1965 report.  In particular, he cited to me a decision in relation to the Fowey Working Men’s Institute, number 31 of the 1965 report, as an example of a case where a working men’s institute, founded as a charity in the latter years of the 19th century, had not, by its rules, limited members to male persons and therefore was invited to apply for registration as a charity as qualifying under the Recreational Charities Act in its unamended form.

39.	Mr Henderson cited and relied upon the decision of Farwell J in the case of Re Mann, Hardy v Attorney General [1903] 1 Ch 232 in support of the proposition that a gift for an institute erected for the general benefit of the inhabitants of a particular locality was capable of qualifying as a good charitable gift.  In so doing, Farwell J rejected the argument that a working men’s club was not a charity, but was a mere social club, not intended specially for the benefit of its poorer members, and therefore did not qualify as a charity.  The judge expressed the view that that was too narrow a view, and that a gift for the benefit of the inhabitants of a particular locality constitutes a valid charitable purpose.

40.	Mr Henderson then moved on from the clause 3 trust to the provisions of clause 7.  He acknowledged that the reference to such trusts as the trustees might in their judgment consider tended to the welfare of the working population of East Grinstead was not, on its face, exclusively charitable because the trustees were given the right to determine what tended to the welfare of the working population; but, nevertheless, he submitted that that gift was itself saved by the 1954 Act.

41.	Finally, Mr Henderson addressed the validity of the clause 9 gift: the power for the trustees to determine the preceding trusts and hold on trust for the original contributors.  He submitted that that was not merely perpetuitous, but it was a condition subsequent which left the valid charitable gift free from the condition subsequent.  In that connection, he took me to the decision of Sargant J in the case of Re Peel’s Release [1921] 2 Ch 218 which he said was to be contrasted with the later decision of Upjohn J in the case of Re Cooper’s Conveyance Trusts [1956] 1 WLR 1096.  Those, in summary, were Mr Henderson’s oral submissions.

42.	Mr Feltham indicated at the outset of his submissions that he did not seek to rely upon clause 9 of the declaration of trust, which he accepted was void for perpetuity; but the thrust of his submission was that the express trusts declared by the 1907 Declaration of Trust all failed and there was therefore a resulting trust in favour of the original contributors of the funds applied in the purchase of the land and the building of the club building.  He disputed that clause 3 created a valid charitable trust.  He disputed also that clause 7 (which he said created a power rather than a trust) gave rise to a valid charitable power; but he submitted that, even if he was wrong in those submissions, the trust property did not pass seamlessly from the clause 3 trust to any trust to be declared pursuant to clause 7.

43.	He submitted that there is not here a perpetual trust in favour of charity created by clause 3.  The case was analogous to the situation in Re Cooper rather than to that in Re Peel.  The clause 3 trust was expressly limited in duration, being confined both to the land conveyed in 1896 rather than to the trust property in general, and also being expressly confined to the pleasure of the trustees.  The land had now been sold, and the clause 3 trust was therefore spent.

44.	He submitted that clause 7 created a mere power since it imposed no obligation on the trustees to declare new trusts, whether charitable or otherwise.  No trusts had in fact yet been declared pursuant to the power conferred by clause 7.  There was, he therefore submitted, a gap in the beneficial interests; and that gap was to be filled by the doctrine of a resulting trust.  As a result, he submitted, there was an intervening non-charitable trust arising under the doctrine of resulting trusts in favour of the original contributors.  That meant that the clause 7 power was invalid for perpetuity because it followed an intervening non-charitable interest, namely the resulting trust in favour of the contributors.

45.	Those, in summary were Mr Feltham’s submissions, although he went on to elaborate upon them.  What he said was that clause 3 did not create a charitable trust.  A working men’s club was, he said, a social club, and there was no element of poverty or need necessarily associated with it.  As an ordinary social club, he submitted that a working men’s club was not in fact charitable.

46.	In support of his submissions, he took me first to the case of Re Sanders’ Will Trusts [1954] Ch 265, a decision of Harman J.  He next took me to the case of Williams’ Trustees v The IRC [1947] AC 447, a decision of the House of Lords.  He cited the Williams case as authority for the propositions, first, that an ordinary social club was not charitable and, secondly, that the case of Re Mann was no longer a valid basis for any decision holding that a working-men’s club was capable of being charitable.  He submitted that the power to make rules for the regulation and management of the club, and for defining the persons and the particular purposes by whom and for which the club premises should be used, and the terms and conditions upon which the same were to be used, which was vested in the trustees by clause 4 of the declaration of trust, was a fiduciary power, and thus only exercisable for the purposes for which it was given.  Those purposes, he submitted, were for the purposes of a working men’s club, and were not capable of extending the club’s membership to women as well as men.

47.	In summary, he submitted that any surgical excision of non-charitable purposes was not available in the present case because the trustees, in the exercise of their powers, would be acting improperly, and outwith those powers, if they were to exercise them otherwise than for the permitted purposes of a working men’s club, confined to working men.  He submitted that, to seek to restructure the membership of the club so as to confine it to the poor, or to extend it to women, would be to act in breach of the terms of the declaration of trust.  He submitted that reliance could not be placed on the Recreational Charities Act 1958.  He submitted that reliance could not be placed upon section 1(2)(b)(ii) because, for the reasons I have already summarised, if the membership were to be extended to women, then the trustees would be acting outwith their fiduciary powers.  Likewise, if the membership were to be restricted to persons satisfying the criteria of poverty or need by reason of social or economic circumstances, again, he submitted, the trustees would be acting outwith the scope of their fiduciary powers.

48.	But he had a further, and overriding, objection to the invocation of the Recreational Charities Act.  He submitted that to do so, the trustees would have had to remove the bar or bars selling alcoholic refreshments that were central to the social institution of the club.  In that context, he took me to the decision of the House of Lords in IRC v Baddeley [1955] AC 572, and also to a decision of the Charity Commissioners in relation to the North Tawton Rugby Union Football Club.  That decision of the Charity Commissioners, in 1997, made it clear that, in the view of the Charity Commissioners, the provision of bar facilities did not amount to facilities for recreation or other leisure time occupation within the meaning of the 1958 Act.

49.	For all of those reasons, Mr Feltham submitted that clause 3 did not create a charitable trust.  So far as clause 7 was concerned, Mr Feltham submitted that this created a power rather than constituting a trust provision.  There was, he submitted, no obligation on the trustees to exercise the power.  That being so, pending such exercise there was a lacuna in the provisions of the deed, which gave rise to a resulting trust.  In that context, Mr Feltham referred me to the decision of Upjohn J in the case of Re Sayer [1957] Ch 423.  Pending the exercise of the clause 7 power, inevitably, Mr Feltham submitted, there must be a resulting trust for the original contributors.  He said that, as a mere power, clause 7 could not fall within the scope of the 1954 Act because it did not itself declare the objects for which the property was to be held or approved.  He submitted that the 1954 Act does not operate so as to turn a mere power into a trust provision.  It could, therefore, not constitute an imperfect trust provision because the 1958 Act only applies to provisions declaring the objects for which property is to be held or applied, and, therefore, has no application to a mere power.

50.	His final point was that, pending the exercise of the aforesaid power, the property was held on resulting trust.  It followed that, since the resulting trust was not in favour of charity, but rather in favour of the original contributors, the clause 7 power was void for perpetuity.

51.	In his reply, Mr Henderson submitted that the clause 7 obligation was a trust when it was exercised.  He made the point that there is frequently some delay in precisely defining charitable trusts but, pending such definition, there is no resulting trust to the settlor.  The property is held on charitable trusts, albeit the content of those trusts is undefined.  The trust is in favour of charity, subject to a power of selection in favour of the trustees.  He made the point that it was cases such as Baddeley and Williams that had contributed to the passage of the 1958 Act.  So far as the case of Baddeley is concerned, he made that good by citing from the speech of Lord Keith of Kinkel in the case of Guild v IRC [1992] 2 AC 310, in particular at page 318D.  He also submitted, in relation to Mr Feltham’s argument on the Recreational Charities Act, that if a case fell within section 1(2)(a) and (b), it would be difficult to envisage a situation in which the facilities could not be said to be provided in the interests of social welfare.

52.	I have considered those submissions, and also the written skeleton arguments.  I must now come to my decision in the light of those submissions.  I first set out the approach that it seems to me I should adopt.  My first task must be to construe the words used in the declaration of trust against the background against which the declaration of trust came to be executed.  In other words, I must first determine the meaning of the trust instrument.  Having done so, I must then apply the principles developed by the courts of equity in their application to trusts in general, and to charitable trusts in particular, so as to determine the effect in law of the document.  I do so, first, by considering those principles as they have been developed by the courts; but I must then go on to see how the application of those court-derived principles has been modified by any relevant and applicable statute.  Here the relevant legislation is the Charitable Trusts (Validation) Act 1954 and the Recreational Charities Act 1958, prior to its amendment by the Charities Act 2006.

53.	First, the task of construction.  I begin with clause 3.  Clause 3 provides:

“The trustees shall during their pleasure permit the lands comprised in the recited conveyance and the buildings to be erected thereon to be used for the purposes of a working men’s club so long as such club is, in their judgment, carried on without loss and so conducted to their satisfaction.”

54.	In my judgment, the case of Re Niyazi’s Will Trusts [1978] 1 WLR 910 affords assistance in the task of construction.  At page 913G, Sir Robert Megarry identified the main dispute in that case as whether, in that case, there was enough in the words and their context to confine the gift to the relief of poverty.  He considered, amongst others, the case of Re Sanders’ Will Trusts, cited by Mr Feltham.  Earlier, at page 913D, Sir Robert had made the point that poverty was not to be confined to destitution but extended to those who had small means and so had to “go short”.  He also indicated that a gift that in terms was not confined to the relief of poverty might by inference be thus confined.  In other words, there might be an implied limitation to poverty.  At page 914, Sir Robert considered the meaning of the phrase the “working classes”.  He referred to a case in which the Court of Appeal had treated the phrase “working classes” as one indicating “people in the lower income range”, or those whose circumstances were such that they were “deserving of support from a charitable institution in their housing needs”.  At page 915, just below letter A, Sir Robert expressed his view that the adjectival expression “working mens” plainly had some flavour of lower income about it, just as “upper class” had some flavour of affluence, and “middle class” some flavour of comfortable means.  He acknowledged that there were impoverished members of the “upper” and “middle” classes, just as there were some “working men” who were at least of comfortable means if not affluence.  He said that one could not ignore the impact of such things as the football pools.  He would now probably have added the lottery.  But he went on to say that, in construing a will, he thought that he was concerned with the ordinary or general import of words rather than exceptional cases; and, whatever might be the future meaning of “working men” or “working class”, he thought that by 1967 such phrases had not yet lost their general connotation of “lower income”.  Sir Robert was, of course, dealing with an adjectival phrase, an adjective that was applied to the noun “hostel”.  At 915G, he acknowledged that the case was desperately near the border-line, and that he had hesitated in reaching his conclusion; but, on the whole, he thought a gift in favour of a “working mens hostel” was charitable, though by no great margin.

55.	In my judgment, bearing that guidance, which is no more than that, and the guidance in the other authorities, including Re Sanders’ Will Trusts, in mind, there is enough in the language of the instant 1907 Declaration of Trust to be capable of importing an implied limitation to poverty or necessitous circumstances.  In my judgment, the reference to the purposes of a working men’s club in clause 3 cannot be divorced from the reference in the later clause 7 to trusts tending to the welfare of the working population of East Grinstead.  That, in my judgment, is reinforced by the very origins and purposes of the creation of the working-men’s club, as related in the first report of the Reverend RB Matson, which I set out at the beginning of this judgment.  When one looks at that, the overwhelming impression that is created is that of a group of well-heeled local citizens seeking to improve the lot of those less well-off than themselves.  The focus is, to my mind, upon the improvement of the conditions of life of working men in the East Grinstead area of limited means.

56.	As someone who has recently seen the Liverpool Everyman and Chichester Festival Theatre production of Howard Brenton’s adaptation of Robert Tressell’s monumental work “The Ragged Trousered Philanthropists”, one appreciates how vulnerable ordinary working men, and indeed working women, were, at the time that both sets of trusts were declared, to the arbitrary powers then enjoyed by employers to set wages and to terminate one’s employment, almost at their whim.  One looks at what was sought to be achieved by the Reverend RB Matson and his fellow donors.  What they were looking to do was to provide a room, albeit one furnished very plainly, and one that might not be very warm, which would be a place of resort, amusement and reading for workmen.  They were seeking to deter the workmen from spending too much of their money elsewhere by providing them with chances of healthy and inexpensive amusement, and in the hope of raising them intellectually and rationally.  Clearly, they were not looking just to men who were then in work because the fact that men out of work found the club of great benefit is recorded.  Reference is made to the promotion of thrift.  Reference is made to the ladies and gentlemen around East Grinstead having an interest in elevating their fellow creatures.  Everything points to an attempt to encourage, and a focus upon, the improvement of the wellbeing of working men much less well off than the contributors themselves.

57.	I move on to the wide discretion conferred by clause 4 of the trust deed.  Its language is very wide indeed.  It talks about making rules for the regulation and management of the club and for defining the persons and the particular purposes by whom and for which the club premises should be used and the terms and conditions upon which they shall be used.  Clause 5 makes it clear that those rules may from time to time be repealed, rescinded, extended or varied.

58.	In my judgment, it would have been entirely within the powers of the trustees to make rules limiting membership of the club to those in needy circumstances.  However, it does not seem to me that that power would have extended so far as to extend full membership of the club to women as well as men.  The club is described as a “Working Men’s Club”, and there is no indication whatsoever in the declaration of trust itself that it was ever intended that membership should be extended to females.  When one looks at the first report presented, the report of the activities of the club, the emphasis is upon men as members, albeit that they might be entitled, or indeed encouraged, to bring along their lady friends.  But the impression is that the membership was to be restricted to men.

59.	Clause 3 is clearly limited in duration.  The trustees are, during their pleasure, to permit the lands comprised in the recited conveyance, and the buildings erected thereon, to be used for the purposes of the working men’s club so long as the club was, in their judgment, carried on without loss and so conducted to their satisfaction.  But the clause 3 trust must be read in conjunction with the words of clause 7:

“If the trustees shall at any time hereafter determine by unanimous resolution that in their opinion the club cannot be usefully and beneficially maintained and kept open, the trustees shall thenceforth hold the trust property upon such trusts as they may from time to time declare by any Deed Poll to be executed by them (which might vary, extend or enlarge the provisions of these presents and may in their judgment tend to the welfare of the working population of East Grinstead).”

60.	Mr Feltham laid great stress on the phrase, “as they may from time to time declare”.  He sought to get out of that a power rather than a trust.  But it does seem to me that the word “may” falls to be construed as part of the wider phrase, “may from time to time declare”.  It is referable to the fact that the trusts may be declared on more than one occasion.  In my judgment, as a matter of construction, the word “may” does not derogate from the earlier use of the word “shall” in the phrase, “the trustees shall thenceforth hold the trust property”.

61.	I accept Mr Henderson’s submission that, effectively, what one has here is a charitable trust, with terms falling to be defined by the trustees, but with the trust property being applicable to charity even before express trusts are defined and declared in terms.  Clause 9 is an overriding power of determination which is clearly void for perpetuity since it is not a power applied in favour of charities themselves.

62.	So, having construed the trust deed, I have to go on to consider its true effect.  Without the intervention of statute, clauses 3 and 7 would not be valid charitable trusts; but, in my judgment, they are indeed saved by the operation of the 1954 Act.  I have not hitherto in this judgment set out the terms of that Act, so far as applicable.  Section 1 is directed to the validation of imperfect trust instruments and their modification.  By subsection (1), “imperfect trust provision” is defined as meaning:

“Any provision declaring the objects for which property is to be held or applied, and so describing those objects that, consistently with the terms of the provision, the property could be used exclusively for charitable purposes, but could nevertheless be used for purposes which are not charitable.”

By subsection (2), subject to the following provisions of the Act:

“Any imperfect trust provision contained in an instrument taking effect before the sixteenth day of December, nineteen hundred and fifty-two, shall have, and be deemed to have had, effect in relation to any disposition or covenant to which this Act applies—
(a) as respects the period before the commencement of this Act, as if the whole of the declared objects were charitable; and
(b) as respects the period after that commencement as if the provision had required the property to be held or applied for the declared objects in so far only as they authorise use for charitable purposes.”

63.	I gratefully accept and adopt the analysis and approach of the late Hart J in the case of Re Ulrich, cited above.  The effect of Hart J’s decision was that the trust in that case was a valid charitable trust.  He held that, on its proper construction, the 1954 Act was not confined in its operation to cases where a charitable purpose had been expressed, and that so to confine it would impose a gloss on the wording of subsection (1) of the Act.  What one had to consider, in the case of a trust provision that permitted both charitable and non-charitable applications of property, was whether anyone would have a legitimate complaint if the whole fund were to be applied for charity.  If, upon an examination of the objects of the trust, the answer was “no-one”, the provision satisfied the conditions of the statute.  In the case before Hart J, no-one could have complained about the fund being devoted to the relief of poverty amongst the identified class of beneficiaries.  In that case, therefore, the trust was validated by the 1954 Act.

64.	I fully adopt that analysis.  It leads me to the conclusion here that both clause 3 and clause 4 are valid charitable gifts.

65.	Mr Henderson invited me to consider the correctness of the reservations expressed by Hart J in paragraph 31 of his judgment in relation to the solution actually adopted by Cross J in an earlier case, Re Mead’s Trust Deed [1961] 1 WLR 1244.  In that paragraph, Hart J expressed the view that a strong argument could be made that the application of the trust fund for an exclusively charitable (i.e. a poverty relieving) purpose would, in the context of the trust deed considered by Cross J, have involved the trustees in an impermissible surrender of the full width of the fiduciary discretions purportedly vested in them by the deed.  He explained that that was largely because of the elaboration in the deed of particularised non-charitable objects, which the trustees would have been bound from time to time at least to consider, and which the deed had, in fact, appeared to place on a level of parity with, if not indeed priority to, the charitable object.

66.	It is unnecessary for me to respond to that invitation on the facts of the present case.  I am entirely satisfied that here, without any failure to consider the full width of the fiduciary discretion vested in them by the 1907 Declaration of Trust, the trustees would have been entitled to have restricted the class of members of a working men’s club to those in necessitous circumstances, such as to qualify as objects of relief as the beneficiaries of a charity for the relief of poverty.  Thus the qualification potentially identified by Hart J in paragraph 31 of his judgment has no potential application to the circumstances of the instant case.  I am entirely satisfied here, adopting the approach in Ulrich, that both the clause 3 and clause 7 classes are saved by the operation of the 1954 Act.  It thus becomes strictly unnecessary for me to consider whether they are also saved by the Recreational Charities Act.

67.	In view of the conclusion I have reached, were it necessary for me to do so, I would have been prepared to hold that the clause 3 gift, and a fortiori the clause 7 gift, were indeed saved by the operation of the 1958 Act.  Again I have not yet set out the provisions of that Act so far as material; and I shall now proceed to do so.  Section 1 is a general provision as to recreational and similar trusts.  Subsection (1) provides that:

“Subject to the provisions of this Act, it shall be and be deemed always to have been charitable to provide, or assist in the provision of, facilities for recreation or other leisure-time occupation, if the facilities are provided in the interests of social welfare.”

But there is an overriding proviso:

“That nothing in this section shall be taken to derogate from the principle that a trust or institution to be charitable must be for the public benefit.”

Subsection (2) provides that:

“The requirement of the foregoing subsection that the facilities are provided in the interests of social welfare shall not be treated as satisfied unless—
(a) the facilities are provided with the object of improving the conditions of life for the persons for whom the facilities are primarily intended; and
(b) either—
(i) those persons have need of such facilities as aforesaid by reason of their youth, age, infirmity or disablement, poverty or social and economic circumstances; or
(ii) the facilities are to be available to the members or female members of the public at large.”

Subsection (3) goes on to make it clear that, subject to that requirement, subsection (1) applies in particular to the provision of facilities at village halls, community centres and women’s institutes, and to the provision and maintenance of grounds and buildings to be used for the purposes of recreation or leisure-time occupation, and extends to the provision of facilities for those purposes by the organising of any activity.

68.	Had it been necessary to do so, I would have found that the requirements of section 1 were, indeed, satisfied.  So far as subsection (2) is concerned, paragraph (a) is clearly satisfied because, on the view I have taken, the facilities of the working-men’s club were provided with the object of improving the conditions of life for the persons for whom the facilities were primarily intended.  Of the requirements of paragraph (b), the first was satisfied because those persons had, on the view I have taken, need of such facilities by reason of their poverty or social and economic circumstances.  That would be sufficient to bring the case within the requirement within the terms of subsection (2).  I would not have held that the facilities were to be available to the members of the public at large because, for the reasons I have indicated, they were not available to female as well as male members.  As originally enacted, the facilities, in order to qualify under subsection 1 (2)(b)(ii), had to be available for members or female members of the public at large.  Provision to men alone was not sufficient.  That anomaly has now been rectified by the amendment introduced by the 2006 Act; but it is not applicable in the present case.  However, it does not matter that alternative (ii) of subsection 1 (2)(b) is not satisfied because the requirement of paragraph (i) was.  I would have rejected the submission that the working-men’s club did not involve facilities for recreation or other leisure-time occupation.

69.	I have considerable reservations about the correctness of the Charity Commissioners’ decision in the case that was cited to me of the North Tawton Rugby Union Football Club.  Whatever the position in relation to the provision of bar facilities generally, where, as I am satisfied was the case here, the objective of providing bar facilities was to provide subsidised drink in moderation - and that was clearly the objective of the original founders of the club - that does seem to me to fall within the description of the provision of facilities for recreation or other leisure-time occupation.  The emphasis of the original founders had been, as the report shows, to provide a place of resort and amusement, and to prevent the workmen resorting to the club from spending too much money elsewhere, and promoting thrift.  It does seem to me that the provision of subsidised drinking facilities, in moderation, can properly be said to be a provision of facilities for leisure-time occupation.  It would, of course, potentially be different if the alcohol is being provided simply in order to make a profit for the provider by encouraging the consumption of large quantities of alcohol.  But anything I say in that regard is strictly obiter.

70.	Had it been necessary to do so, I would have refused the invitation to decide this case by reference to the decision of Farwell J in the case of Re Mann.  I am satisfied that, as Mr Feltham submitted, that case cannot stand with the later authorities to which I was taken.  But the effect of those authorities themselves has now been considerably mitigated by the provisions of the Recreational Charities Act 1958.  In my judgment, it should no longer be necessary or appropriate for reliance to be placed on Farwell J’s decision in the case of Re Mann, which was very much a decision of its own time, and against the background of the then applicable understanding, or misunderstanding, of the law relating to the definition of charities.

71.	I trust that what is now an over-lengthy extended judgment covers all relevant matters.  The effect of my decision is that, for the reasons I have given, I find that there was indeed a valid charitable trust saved by the provisions of the 1954 Act, which, speaking for myself, I regard as containing beneficial and salutary provisions, despite the denigration of the legislation, soon after the passage of the Act, by an earlier generation of Chancery judges.