In Commissioners of Income Tax - V - Pemsel (1891) (A.C. 531), Lord McNaughten stated "a charity in its legal sense comprises four principal divisions:

• trusts for the relief of poverty.
• trusts for the advancement of education.
• trusts for the advancement of religion.
• trusts for other purposes beneficial to the community, not falling under any of the preceding headings. The trusts last referred to are not less charitable in the eye of the law, because incidently they benefit the rich as well as the poor, as indeed every charity that deserves the name must do either directly or indirectly.

The whole historical area of law of charities in Ireland was reviewed by Mr Justice Keane (as the then was) in the High Court "In the matter of The Trust of the Worth Library" (1995), 2 .I .R., Pg 301). The facts were that Dr Steevens Hospital in Dublin which was incorporated by a private Act of the Old Irish Parliament of 1729 containing the Worth Library collection (4,5000 books) closed in 1988. The question here was the Worth bequest of various valuable books, a charitable bequest.

Judge Keane outlined that in England the first three classifications are charitable where there is a public benefit. He accepted that this was also the law in Ireland with one important rider (page 335): in the case of gifts for the advancement of religion, the presumption that they are charitable is conclusive by virtue of Section 45 of the Charities Act, 1961.

Judge Keane pointed out (at page 336) that there is one principle of general application in that "the court leans in favour of charities and, consequently will prefer a construction which gives effect to the testator’s desire to benefit a stated object rather than one which leads to a failure of the bequest". He reviewed the various authorities in relation to education including Re: McEnery (1941) IR which held that a bequest for a trust fund enabling the nephews and nieces of the testator and their descendants to obtain a profession was not charitable and the English case of Oppenheim - V - Tobacco Securities Trust Company Limited (1951) (A.C.) which held that a trust for education of children and employees was not charitable although the number of employees exceeded 110,000. Therefore Judge Keane held that this gift of books was not a gift for the advancement of education as it lacked the necessary element of public benefit. It was a book collection having been bequeathed "for the use benefit and behoof of the physician, chaplin and surgeon for the time being".

On review of the Will Judge Keane pointed out that there was no indication in the Will that the intended library was for the benefit of any persons other than the named office holders. Notwithstanding same he held that it was a valuable charitable gift to the Hospital and therefore being of public benefit within category 4 for the welfare of it’s office holders notwithstanding that the number did not exceed 3. He further concluded that the cy-pres scheme to be framed by the court must provide for the retention of the books (which were extremely valuable) in their original setting in Dr Steevens Hospital.

It is interesting to note that Judge Keane in his book "Equity and the Law of Trusts in the Republic of Ireland" states that there can be no charity without a public benefit; and that:

• the section of the public must not be numerically small.
• the benefits must not depend on the members benefiting being related to the donor.

However in the Worth Library Case Judge Keane held that Dr Steevens Hospital was a charitable institution and that a perpetual gift of the library to Dr Steevens Hospital was charitable.

From a Capital Acquisitions Tax point of view, Section 54(2) provides that an exemption from Capital Acquisitions Tax will apply in respect of benefits taken for charitable purposes in Ireland (which includes the 32 counties).

Under Section 50 of the Finance Act, 1987 with effect from the 9th of July 1987 the requirements of the gift or inheritance be expended in the State or Northern Ireland has been dispensed with and a total exemption is given provided the benefit could be regarded as charitable within the general law of the State. [ I would also refer practitioners to Capital Acquisitions Tax, by Brian Bohan, Pg 257].

In order to obtain exemption from filing returns for income tax or corporation tax in respect of charitable trusts, you should write to The Office of the Revenue Commissioners, Charities Section, Government Buildings, Nenagh, County Tipperary.

Under the 1984 Finance Act (as amended by the Taxes Consolidation Act) you can gain exemption from income tax to the extent that income is applied solely for the purposes of promoting athletic games or sports.

Finally it is important to point out that the main objects of the trust or the Memorandum of Association must be charitable. It is not sufficient that one of its objects is to assist a charitable institution to gain exemption from income tax.

Statutory Law

The Charities Acts 1961 and 1973

The administration of charities are the responsibility of a board entitled " the Commissioners of Charitable Donations and Bequests" which was first established by the Charitable Donations and Bequests (IR.) Act 1844 and there were amending Acts passed in 1867, 1871 and 1955. Its jurisdiction is now provided for in Part II of the Charities Act 1961 as amended by the Charities Act 1973. The Board has extensive functions. The Charity Commissioners are located at 12 Clare Street, Dublin 2, telephone 6766095.

The overall responsibility for enforcing charitable trusts rest with the Attorney General. The Attorney General appoints a practising solicitor to advise him.

Section 49 of the Charities Act, 1961 provides that where there is provision that a benefit taken by an office holder having dual functions; charitable and non-charitable, the gift must be regarded as for charitable purposes unless the donor apportions the gift.

Section 50 of the Charities Act, 1961 states that every gift made for the provision, maintenance and improvement of a tomb, vault or grave or tombstone or any other memorial to a deceased person which would not otherwise be charitable shall be regarded as a charitable gift provided:

• in the case of a gift of income only - £60.00 a year.
• in any other case = £1,000.00 in amount or value.

Powers of the Charity Commissioners

Extensive statutory functions including the framing of Cy-Pres schemes (s29, 30 and 47 of the 1961 Act as amended by s4 of the 1973 Act), the authorisation or execution of sales, exchanges grants and surrenders of leases (s34 -37 of the 1961 Act as amended by s11-13 of the 1973Act) the purchase of sites for buildings (s39 of the 1961 Act), the appointment of new trustees of charities (s43 of the 1961 Act as amended by the s14 of the 1973 Act) and the making of incorporation schemes for charity trustees (s2 and s3 of the 1973 Act).

The Charities Act, 1973 was instrumental in providing inexpensive procedures and for the amendment of old statutes and charters governing charities.

Section 2 and 3 of the 1973 Act give the Board power to frame schemes incorporating charity trustees. This enables trustees to become an incorporated body under set out terms and conditions. It is an inexpensive procedure and the objects of the charity are clearly defined. On the framing of such a scheme, the trust property automatically vests in the charity on the applicable specific trusts subject to any rights and liabilities disclosed.

Section 4 is a very important section and provides that schemes framed by Charity Commissioners can amend or alter statutes and charters relating to specific charities and the Board can import a power of sale, power to raise monies and a power to extend the beneficiaries of any such charities and a merger of charities.

Section 47 of the 1961 Act now provides a list of circumstances in which a Cy-Pres application of funds may be made.

Section 4 of the 1973 Act incorporates a new Cy-Pres jurisdiction. In essence, to summarise again the Commissioners have now been given extensive powers as opposed to the limited power under the 1961 Act to frame a Cy-Pres scheme. However such a scheme may be made on the application of the trustees and due notice and publicity must be given to bring the proposed scheme to the attention of persons interested (s4.1 of the 1973 Act and s29 of the 1961 Act). The Board can frame a Cy-Pres Scheme without the necessity of applying to the High Court where any of the circumstances specified in subs 1 of s47 of the 1961 Act exist and the charitable gift does not exceed £25,000.00 in value (see s29 of the 1961 Act as amended by s8 of the 1973 Act).

Duty to Publish

Sections 20 and 52 of the 1961 impose a duty of executors to publish (unless exempted) advertisements of charitable devises and bequests. Only the Board can give an exemption. Practitioners are aware when filing papers for a Grant of Probate a form is completed in respect of charitable bequests to the Charity Commissioners and lodged in the Probate Office. On a regular basis the Charity Commissioners collect these forms from the Probate Office and decide if necessary if application is required in any particular case.

Exemption from Rates

The matter is covered in Wylie’s Irish Land Law pages 575-576. It is generally the case that tests for exemption from rates on the grounds of charity are much narrower than those for determining whether or not an object is otherwise charitable. Wylie gives that example that St. Patrick’s College, Maynooth which is unquestionably a charity but is not exempt from rates.

No Register

There is no register of charities in Ireland. Charities have a Revenue number for the purposes of obtaining tax relief. As stated the Commissioners of Charitable Donations and Bequests for Ireland deal with applications pertaining to property which is the subject of an exclusive charitable trust and the Attorney General has overall control in enforcing the charities. However the Commissioners will not deal with queries by a purchaser in relation to property and if a bequest is made to them they will quite rightly point out that the purchaser should take his own legal advice on the matter.

Power of Appointment of New Trustees of Charity Properties

Section 10 of the Trustees Act 1893 provides the machinery for the appointment of new trustees and this section is also used for charitable trusts. The provisions relating to the appointment of new trustees and the discharge and retirement of new trustees are set out in s10, 11, 12, 35, 37 and 47 of the Trustees Act 1893.

The statutory power of appointing new trustees is required to be in writing. In order to vest the property in the new trustees should be done by deed with the inclusion of a vesting declaration. In the case of Land Registry property, a deed of transfer to the new trustees is necessary. Various charitable precedents are included at the back of this Booklet.

Section 14 of the Charities Act 1973 (amending s43 of the 1961 Act) gives the Commissioners the power to appoint new trustees of land only.

National Schools

National Schools can be regarded as charitable trust properties under the Lease of Schools (Ireland) Act, 1881. When selling National Schools you will have four parties to consider:

• The freehold owner.
• The leasehold owner (usually a religious body or person).
• The Department of Education and Science.
• The Charity Commissioners.

Registered Title

Under s92 of the Registration of Title Act, 1964 expressly states that no notice of a trust whether expressed, implied or constructed shall be entered into the register and further that none of the following persons who receive any document for registration will be affected by notice of any trust containing or arising out of such document:

• The Registrar
• A registered transferee for valuable consideration of the land.
• A registered owner of a charge created for a valuable consideration of the land.
• A person claiming an interest created for a valuable consideration in a registered burden on the land.

However, the application of first registration where there is a trust, the trustees may apply for an entry of an inhibition to protect their interest. Form 88 of the Rules contains a large number of specimen entries of inhibition.

Form 27 deals with the transfer to persons who are intended to be trustees for sale.

In the sale of unregistered land by a body which is a charity, the consent of the Commissioners for Charitable Donations and Bequests is required.

In the case of the sale of registered land which is subject to a charity, the consent of the Charity Commissioners is also required for the sale of any charity property. The legal obligation to obtain such consent in the case of a registered absolute title in my view rests solely with the trustee owner or vendor. If he does not obtain the consent, but sells registered absolute land without it, and the purchaser becomes registered as full owner with absolute title, the then charitable trust ceases to affect the land. The Charity Commissioners or the Attorney General may have some remedy against the vendor, or former charitable trustees, but this should not affect the purchaser. In my view this is the effect of s37 of the Registration of Title Act 1964 which provides that upon registration of a person as full owner with absolute title an estate in fee simple vests in the person so registered subject only to such burdens if any, as may be registered as effecting the land and the burdens to which, though not registered land, may be subject under s72 of the 1964 Act. Section 72 does not of course provide for trusts to affect the title of a registered owner without being registered because one of the fundamental features of the entire Land Registration Scheme is that trusts cannot be registered, but can only be protected by cautions or inhibitions.

Therefore, if a registered owner is subject to a trust his obligation to observe it is preserved by s37(4) of the 1964 Act. This only regulates the relations between the registered owner and those for whom he holds in trust, or those (such as the Attorney General), whose duty it is to protect the trusts. It does not affect a purchaser of value who becomes registered even though he had notice of the trust. Thus, in Rattigan - V- Regan, 1929 (IR 342) Murnihan J. said on page 350.

"if (a purchaser of value) is not party to any fraud or unfair dealing, if in fact there has been such, he is not affected by Notice in respect of transactions in which he has had no part".

Glover on Registration at page 14 quoted by McAllistar on Registration (1973) page 26 said "the register shows the person who is in fact the owner. How that person got on the register is no business of the purchaser; whether the registered owner holds the lands subject to a trust is of no concern of his; the register is a bridge that transports him safely across the morass of trusts and equities through which the purchaser of unregistered land must struggle at his peril; for they do not affect the lands; and on being registered as owner, his ownership is subject only to the registered burdens, and such of the special and limited class of burdens that effect registered land without registration as, in fact, exist over the land he acquires".

However there is one proviso in relation to the above; the registered owner must be registered with an absolute title. If the registered owner is registered with a "possessory title or subject to equities" it is possible that upon investigation of title in the Land Registry the existence of a trust affecting the property may come to light which the Registrar might insist on by protecting the interest of the trust by the registration of an inhibition, example, preventing dealings by the owner without the consent of the Charity Commissioners. Obviously if the conversion to absolute title resulted in a caution or inhibition to be registered on the Folio, its terms would have to be complied with.

General Conveyancing Requirements in relation to Trusts

No Notice of Trust on Title

It is not unusual to come across a deed of conveyance or assignment on sale made by members of religious congregation with no reference to a trust expressed in the deed. These deeds are usually in the baptismal names of the religious congregation. In the absence of any trust a purchaser is entitled to assume that there is no trust on title and they should not seek to put a trust on the title. The matter is extensively covered in the foot notes to Irish Conveyancing Precedents by Judge Laffoy.

It is also common in these cases to come across situations where there are deaths on title. It is important to obtain the normal Certificate of Discharge from Capital Acquisitions Tax (Section 48). When making the application to the Revenue Commissioners it is important not to do anything which would put a trust on title. If the Revenue Commissioners are satisfied that the purpose for which the property, the subject matter of the application is used, is charitable, they will stamp the Certificate of Discharge. Therefore when submitting the application under s48 it is necessary to submit a covering letter with the application indicating that the applicants have no beneficial interest in the property and that the property is used as a school or other educational charitable use. It is useful also to quote the charity income tax reference number.

In the case where intermediate deeds recite the fact that members of a religious congregation transfer lands to other members of the same religious congregation and it is recited in the deed, that the grantees are entitled to an equity to the property and there is no trust expressed on the title, a purchaser is not entitled to assume the property is charitable notwithstanding that the deed might have a nominal stamp duty.

If the documents of title disclose that the parties are trustees of land or money on certain particular trusts, and the purchaser has notice of these trusts, the purchaser is entitled to make the usual inquiries respecting the trusts so disclosed.

In many circumstances it may be impossible to keep the trust off the title and in this case it is necessary to apply to the Charity Commissioners to obtain their consent.

Notice of Trust on Title

In this case there are two types of transactions that can take place.

The first is where a purchaser has the power of sale or holds the property upon trust for sale.

Note that a trustee cannot give himself this power. The power must be contained in the original grant. The best way to effect a trust for sale is for the grantor as beneficial owner to provide in the deed of conveyance that the grantee is to hold the property upon trust to sell same with power to postpone such sale and pending such sale, to use the property for particular purposes which can be outlined or for such purpose or purposes as the grantee or a person holding a particular office shall determine.

No Trust for Sale in the Title Deed

In the case where there is no trust for sale, it is clear the trustees cannot sell the property without the proper authority. If the trust is exclusively charitable, then an application must be made to the Commissioners for Charitable Donations and Bequests. Their consent to sale thereof arises under s34 of the Charities Act 1961 as amended by s11 of the Charities Act 1973.

Companies by Guarantee

A trust company which is exclusively charitable in its' objects cannot rely on the power of sale contained in its' Memorandum unless the original deed of conveyance or grant, granted a power of sale.

Application to the Charity Commissioners

Sales

It is not the Commissioners practise to sanction a sale at an under value, save in the circumstances outlined in s11(2) of the 1973 Act and every application to the Board (except in the case of a sale by public auction) must be accompanied by a report from an independent auctioneer giving the current market value of the property.

An example of an application which may be acceptable at a under value is a sale from one charity to another charity.

Trustees

A deed appointing new trustees should be signed by:

• A person said to have been given a power of appointment in the original trust deed.
• A surviving or continuing trustees who signed the deed at the time when there was a vacancy for a new trustee.
• If there are no trustees available to make the application by the personal representatives of the last surviving trustee who was alive. He may make the application for liberty to sell the property in his capacity as personal representative of the last surviving trustee, or he could appoint new trustees.
• If none of the above is possible an application should be made to the Board. The Commissioners have wide powers under s43 of the 1961 Act as amended by s14 of the 1973 Act.

The Commissioners may make an order appointing new trustees, either in substitution for (in which case the existing trustees should indicate an intention to retire from the trust), or in addition to the existing trustees, or though there are no existing trustees.

It sometimes happens, particularly in relation to the sale of National Schools that it is not possible to ascertain the trustees of the freehold interest and the trustees of the leasehold interest. What happens in this case is that the Charity Commissioners appoint new trustees of both interests. However, it should be noted that the Commissioners do not consider it desirable to appoint the same trustees of both interests. In such an event another person should be nominated to act as a trustee of the leasehold interest in addition to the proposed new trustees of the freehold interest. The Commissioners will also be required to be furnished with a new consent in writing from the person indicating his willingness to act as a trustee if appointed by the Board.

It will be important to have trustees appointed of both interests in the event of any sale. If the lease is an educational lease and is still subsisting, on any sale of the property, unless the trustees join in the application to the commissioners, the purchaser will only get a reversionary interest ie. the right to collect a nominal rent until the term expires.

The Department of Education and Science in the Sale of Primary School Leases

In connection with the sale of primary school leases, an application should be made to the Department of Education and Science, Portlaoise Road, Tullamore, Co. Offaly, telephone 0506 21363.

The basis for all leases for primary schools is The Leases for Schools (Ireland) Act, 1881 a copy of this Act is attached to this Booklet. Under the 1881 Act the Lease must be for a period of not less that 99 years and not more than 900 years. The particular provision of this legislation is s5 which provides that if a school property is not used for school purposes for a continuous period of 3 years then it is open to the Successor In Title of the original lessor to re-enter. Where the application is for a new school, the Department must obtain a copy of the title for example if it is a Land Registry title an up to date copy folio must be furnished. This will enable the registered owners to enter into a lease with trustees which lease will be registered as a burden on the folio and a leasehold folio opened in respect of it. In the case of unregistered land, a new conveyance must be undertaken showing title in the proposed grantors and subsequent registration of the lease in the Registry of Deeds will be on that title.

Vesting Documentation

Leases

Where there grantors are individuals, there must be not less than 3 trustees only one of whom can be a trustee owner. Where trustees die or leave the country, new ones can be appointed by the surviving trustees. If there are no surviving trustees, the Minister can appoint new trustees.

Declaration of Trust

Where the body involved is a Diocesan Trust, the document that is used is a Declaration of Trust. The text of this document is that the trust declares and undertakes to hold the property for the same purposes as are found in the school lease. The only difference is that the trust never dies and it will never be necessary to appoint new trustees.

The above procedures will also pertain where it is intended to construct an extension to an existing vested school. The term of the lease in this case or the declaration of trust will be coterminous with the term of the parent lease or declaration of trust.

In cases where there is not a leasehold folio open, it is important to point out that the leases and declaration of trust should be registered in the Registry of Deeds.

New Trustees

The existing trustees can appoint new ones. But in a case where there are no trustees left there is a provision in the lease enabling the Minister to appoint a new trustee where the last of the trustees dies without appointing new trustees.

Surrender of Leases

Because of movements of populations etc. school sites do not always last 99 years. In these circumstances the deed can be surrendered.

Where a very old school has time left to run on the lease and all trustees have long since died, new trustees must be appointed in order to deal with the residue of the term of years. However if the purpose is purely to release the entire of the site burdened by the school lease, one trustee will be sufficient. But in all cases where trustees are appointed and the school is to continue there must be 3 trustees.

In all leases with the Department of Education and Science there is a provision which states that if the full amount of the original sum paid by the State is refunded to the Commissioners of Public Works together with sums (not less that £25.00 per year) which has been expended on the school, that the trust created by the lease shall be null and void.

In practice, in relation to old schools, I have found it best to apply to the Department of Education and Science to see what amount of money in relation to the proceeds of sale they will require. If the school is very old (example 100 years) they might not require any money. I would then proceed to apply to the Charity Commissioners for their consent.

In summary therefore, the following is the position in relation to the Department of Education and Science:

• The Minister for Education and Science does not have any title to the site under the lease. The Minister’s interest is confined to the amount of the grant and the trust created by the lease and the appointment of trustees.
• Where the owner is a number of persons (example Nuns, Christian Brothers or Parish Trustees), only one of these owners can be a trustee for the purposes of the proposed lease.
• The number of trustees appointed under the lease is 3 and it must be for a period not longer than 900 years or shorter than 99 years.
• The Minister in consideration of the grant of the term of years, has power to appoint new trustees and to see that the trusts created by the lease are kept.
• Where a portion of the site is no longer needed: obtain a copy of the map of the portion being required to be de-vested together with a draft deed of surrender.
• Existing trustees have powers to appoint new trustees but the Minister must approve of them . If this does not happen prior to the drawing up of the document of appointment the Ministers sealing of it will convey the necessary sanction.
• In relation to an extension of an existing school and where an area outside the original vested area is being obtained, an investigation of title is necessary and a new lease drawn up. However the lease will be for a period coterminous with the existing lease and both leases will end simultaneously.
• A new school on a previously vested site will still require the full 99 years at least and depending on when the title was examined, it may be necessary to have the title re-investigated.