Link: Case Summary Document
Citation: England and Wales High Court (Chancery Division), Donaldson QC (sitting as deputy judge)
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.
This English case concerned an application by the executors of a will. The testatrix had left several charitable bequests from her residuary, including one to the International Bible Society (UK) (IBS). At the date of the will, the IBS was an unincorporated registered charity. With effect from 31 May 2007 it transferred the entirety of its assets to IBS-STL Ltd, an incorporated registered charity. The merger was registered on 2 January 2008, and the register records that IBS ceased to exist on 5 February 2008, both dates preceding the death of the testatrix.
Section 75F of the Charities Act 1993 deals with gifts to charities which have merged. On 16 April 2009, having reached the conclusion that IBS-STL Ltd had broadly the same aims as the by then defunct IBS, the executors made an interim distribution of £330,000 to the IBS-STL Ltd in accordance with section 75F. Subsequently, IBS-STL Ltd became insolvent and went into administration, and later liquidation. The executors still had £214,000 to disburse to IBS-STL Ltd but it was in liquidation, so that any charitable disbursement would be effectively for the benefit of its creditors rather than any charitable activity. The executors sought guidance from the court as to whether the moneys should be disbursed to some other charitable bodies under clause 6.3 of the will, or whether section 75F required that they disburse the remaining money to the merged body, even though it was in liquidation.
His Honour said that (at ):
…this case was not concerned with a pecuniary legacy to IBS. Instead, the will gave the residuary estate to the Trustees who are then to hold it on trust for the beneficiaries. In normal language that may be a gift for each beneficiary, but not to the beneficiary. I can however see no sensible reason why the application of the statute should be confined by such a narrow interpretation. The obvious purpose of (section 75F) is to ensure that money (or property) which the benefactor has specified should pass to a charity accompanies it into the entity into which the charity has been merged notwithstanding that the benefaction is not to take effect until a time which postdates the merger. That purpose is in my view equally engaged whether the route of benefaction runs directly to the donee or a trustee is interposed with an obligation to confer the benefit using the money (or property) provided by the benefactor.
The gift to IBS could not be carried out by the time of the death of the testatrix. The gift went to the merged body in accordance with the will and the statute. However, now that the merged body was in liquidation, the Court held that it was appropriate that the remaining gift be given to other charities as determined by the executors under clause 6.3 of the will. Section 75F of the Charities Act 1993 did not require that the merged body continued to benefit in these circumstances.
The case may be viewed at: http://www.bailii.org/ew/cases/EWHC/Ch/2012/666.html
Implications of this case
This was another case of a gift not being able to be given under a will, but the circumstances were that the charity beneficiary was insolvent. This involved the court in interpreting a section of the relevant Act to see if it had a narrow meaning, or whether there was room for discretion in the somewhat unusual circumstances. The remaining money was not given to the insolvent charity, but was permitted to be given to other charities at the executors’ discretion.