Link: Case Summary Document
Citation: [2020] EWHC 1189 (Ch)
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.
Summary:
A dispute between three related charitable trusts as to the investment of surplus funds
This case concerned three charitable trusts operating within the Greek community in London. The Greek Cathedral Cemetery Enclosures Trust (Cemetery Trust) is a charitable trust made in 1860. Its purpose was to make provision for the burial of what is described in the trust deed as “Members of the Greek Community in London”. The only other provision contained in the 1860 Declaration of Trust related to the appointment of new trustees by the existing trustees. The Trust over the years invested its surplus funds in extending its cemetery enterprises. In 1935, the trustees who had been appointed in 1927 executed a declaration (the 1935 Declaration) declaring that any surplus funds “shall be held by them upon trust to apply them in accordance with any Resolution that may be passed at a General Meeting of the Greek Community in London convened for the purpose by a clear majority of two-thirds of the members present at such meeting and voting on such resolution”. At the time of the initiation of the dispute, the Cemetery Trustees were holding approximately £250,000, growing to almost £1.2 million at hearing, and expenses of the Cemetery Trust were between £23,000-£40,000 a year.
The Greek Cathedral Trust (Cathedral Trust) was established in 1888 by a meeting of the Greek community resident in London to use various funds for the maintenance of the Greek Church in London. Those contributing funds and those as signatories of the articles of rules and regulations governing the constitution of the Greek Church of Aghia Sophia Moscow Road, London were entitled to vote at any meeting of the Greek Community resident in London.
The Land and Vicarage Trust which was created in 1879. It owns the Cathedral, and clergy accommodation and the buildings were erected with money provided by “a Society or Community of persons known as the Greek Community in London”.
These charities are linked to the Greek Orthodox Cathedral of the Divine Wisdom in London (also known as Aghia Sophia or St Sophia). At the 2014 annual general meeting of the assembly of the Cathedral, concerns were raised about the fact that the surplus funds held by the Cemetery Trust were in cash and had not been invested. The assembly passed a resolution directing that £200,000 should be transferred by the Cemetery Trust to the Cathedral Trust for investment. The Cemetery Trust refused, claiming that their trustee predecessors did not have the power to make the 1935 declaration, and if that was incorrect the Cathedral Trust was not the same as “the Greek Community in London”. Further, a cy- près scheme was needed given that the purpose of the Cemetery Trust is to provide for the burial of members of the Greek Community in London.
The court formulated the questions it needed to address as (at [28]):
a) What was the meaning and effect of the 1860 Declaration of Trust?
b) Were the Cemetery Trustees entitled to challenge the validity of the 1935 Declaration?
c) If they were, was the 1935 Declaration valid?
d) Is the assembly of the Cathedral the “Greek Community of London” or, if not, what is meant by that phrase?
e) Is a cy-près scheme needed either in relation to the surplus funds of the Cemetery Trust or in relation to the identity of the group of people for whom the Cemetery Trust provides burial rights?
What was the meaning and effect of the 1860 Declaration of Trust?
All parties accepted that the conventional view of the approach to interpreting a charitable trust document or a will is no different from interpreting a contract. The principle in Attorney General v Sidney Sussex College (1869) L.R. 4. Ch. 722 was accepted as good law even though perhaps inconsistent with modern construction of trust deeds.[1] Where there was some ambiguity in the terms of a trust, then contemporaneous usage could be referred to, and the Court would lean to that construction of the instrument which best corresponded with the mode in which the funds had been for so long a period applied.
The court found that “it is clear that the trustees of the Cemetery Trust are required to apply whatever property they have, whether the original burial rights or any proceeds or any income from those burial rights, for the purposes of interment of members of the Greek Community in London” (at [48]). It was accepted that in ordinary trust law, and in the absence of any provision to the contrary, a gift of property entitles the donee to any future income from that property. If trustees hold capital of a trust for a particular beneficiary and their interest is vested, that beneficiary will also be entitled to the income and that there was no reason for this not to be the case in charity law.
The 1860 Declaration of Trust required the trustees to hold the assets “for the purposes of interment but subject to such rules and regulations as the said Greek Community of London shall from time to time by order under their Seal direct”. The Greek Community was founded as a formal organisation in 1837 and the main purpose of founding the Greek Community was, in turn, the founding of a Greek Orthodox Church in London. At the General Meeting of the Greek Community in 1841, a committee was established to find a suitable site for a Greek cemetery, which was achieved in 1842, and then resulted in 1860 in the Cemetery Trust.
It was suggested that the words “rules and regulations” could be interpreted as being confined to administrative matters on the basis of the rule in Attorney General v Sidney Sussex College (1869) L.R. 4. Ch. 722, but the court found no ambiguity. It was therefore not necessary to examine how the Cemetery Trust funds had been used in practice in order to determine the correct interpretation of the 1860 Declaration of Trust. The court found that “even before the 1935 Declaration, it was the Greek Community which was calling the shots in relation to the funds held by the Cemetery Trustees and that no great attention was paid to the role of the Cemetery Trustees as a separate body” (at [64]).
Thus, in the absence of any such direction, the Cemetery Trustees were free to deploy the funds they held as they saw fit, again within the confines of the overriding purpose of using the funds for burial of members of the Greek Community in London.
Could the Cemetery Trustees challenge the validity of the 1935 Declaration?
It was argued that the case authorities did not allow trustees to challenge the validity of their trust deed.[2] Both authorities cited were cases where funds had been given on relatively vague terms, and the trustees had subsequently executed formal declarations of trust confirming the terms on which they held the trust property. The 1935 Declaration was an attempt to change the way in which any surplus funds should be used, and the Cemetery Trustees were entitled to know whether that change was validly made. The court held that the authorities should be confined to any challenge to the original terms of the trust in circumstances where the donor did not themselves confirm the precise terms of the trust, and should not be extended so as to prevent trustees from questioning the validity of any subsequent changes to the terms of the trust made by their predecessors.
Was the 1935 declaration valid?
The court found that although the 1935 Declaration had remained unchallenged for 85 years, the trustees of the Cemetery Trust in 1935 had no power to make the declaration and that it was therefore void (at [96]). There was no power in the original trust deed to make such a declaration and there was no gap, as the purposes were clear. In any case, the 1935 Declaration was void for uncertainty as it contained no express limitation as to the purposes for which the Greek Community could require the funds to be applied.
The Greek Community in London
Was the Greek Community in London an organisation separate from the Church and which ceased to exist sometime between 1933 and the end of the Second World War, or a reference to what is now the Assembly of the Greek Orthodox Cathedral of Divine Wisdom in London?
After considering extensive historical evidence, the court found that the reference to “the Greek Community in London” (or “the Greek Community of London”) in the 1860 Declaration of Trust was a reference to what is now referred to as “the Brotherhood” in the current regulations of the Cathedral, and which takes its decisions at what is referred to as the Assembly in accordance with those regulations. The Assembly is entitled to give directions to the Cemetery Trustees in relation to the way in which the assets of the Cemetery Trust are used and administered as long as those directions are in accordance with the overriding purpose of the burial of members of the Greek Community in London.
Cy-près scheme
The court found that the expression “Members of the Greek Community in London” refers to members of the Cathedral, and that that body of person still exists (at [152]). There was no requirement for a cy-près scheme to describe a new class of persons in whose interests the Cemetery Trust should operate. However, the fact that the funds held by the Cemetery Trustees were very significantly in excess of their annual maintenance requirements and growing rapidly prompted the court to remind the Cemetery Trustees of their duty to apply for a cy-près scheme should it become clear that they were holding funds which would not be needed to fulfil the purposes of the Cemetery Trust.
Implications of the Case:
This is a complex case which touches on a number of charity law issues involving the interpretation of trust deeds. It may have saved later confusion if the trustees had approached the court in 1935 for direction about the issue of surplus income.
[1] In that case the testator executed a will in 1641 which left half of his estate to each of Sidney Sussex College in Cambridge and Trinity College in Oxford to be used for the education of certain of his descendants. From time to time, some descendants claimed the benefit of the gift. However, where no descendants came forward, the colleges used the funds for the general purposes of the colleges or to fund scholarships or exhibitions. The question which arose in 1869 was whether they were entitled to do so.
[2] Attorney General v Mathieson [1907] 2 Ch. 383 as explained by the Supreme Court in Shergill v Khaira [2015] AC 359.
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