Law Report: Trusts to benefit whole borough:
Peggs and others v Lamb and others – Chancery Division (Mr Justice Morritt), 12 March 1993. Paul Magrath, Barrister 20 April 1993.
The freemen of the ancient borough of Huntingdon did not have a statutory right to share equally between them all the income of the land, proceeds of sale and investments currently held by the trustees of the Huntingdon Commons Charity and Lammas Rights Charity.
The original and charitably valid purpose of the two trusts was to benefit the inhabitants of Huntingdon; but because the number of qualifying freemen and widows had dwindled considerably a scheme should be directed, pursuant to section 13(1)(d) of the Charities Act 1960, to enlarge the class of beneficiaries to include all the borough’s inhabitants.
Mr Justice Morritt so ruled on a summons brought by the trustees of the two charities, against representatives of the freemen and widows, and the Attorney General representing the interests of charity generally.
Timothy Lloyd QC and Malcolm Waters (Greenwoods, Peterborough) for the trustees; Hubert Picarda QC (Bates Wells & Braithwaite) for the attorney General.
Mr Justice Morritt said the two charities, as registered under section 4 of the 1960 Act, had the objects of providing income or other benefits to the freemen and widows in Huntingdon. Each was presumed to arise from a grant to the ancient borough, subject to a trust or condition in favour of the freemen and widows, as exemplified in Goodman v Mayor of Saltash (1882) 7 AC 633, in order to give lawful origin to rights exercised from time immemorial. But the class of freemen now entitled to benefit had so reduced, and income from the proceeds of the sale of charity property had so increased, that the annual benefit to a freeman was more than the Charity Commissioners considered to be considered to be consistent with the application of charitable funds. They suggested the trustees apply for a scheme to ensure income was only paid to freemen in need and the surplus applied to help the poor and sick of the borough.
The freemen claimed a statutory right to take equally between them the whole of the income of the trust property, pursuant to section 2 of the Municipal Corporations Act 1835. The Act’s purpose was to separate the freemen or burgesses from the corporation and to vest in the new corporation the property of the old while preserving certain rights of the freemen. Section 2 provided that the freemen ‘shall have and enjoy. . .as he or she by any statute, charter, by-law. Or custom in force at the time of passing this Act might or could have had, acquired, or enjoyed in case this Act had not been passed.’
The freemen argued that the evidence showed a long and consistent pattern of the freemen sharing equally between them the enjoyment of the land in specie and any income derived from it. This usage, even if only permissive before 1835, was converted into a statutory right by section 2. But his Lordship agreed with the Attorney General, that while section 2 made the rights enjoyed prior to 1835 actionable at law, it could not alter or enlarge them, or create a right where none had existed. Before 1835 the property was held on charitable trusts which the Act did not affect.
By 1835 the freemen’s use and enjoyment had existed for over 600 years, so that a lawful origin ought to be presumed as at 1835 if it was reasonably possible to do so, For the reasons given by the House of Lords in the Saltash case, which were equally applicable in 1835, such lawful origin could only be found in a charitable trust.
His Lordship also rejected the freemen’s submission that the purpose of the trusts was merely the provision of income and general benefits for individual freemen and their widows. The original purposes were general charitable purposes which were presumed to have been the purposes laid down in the Middle Ages. The class of freemen was then and for several centuries after an entirely suitable one by reference to which the charitable purposes should be laid down.
That was no longer so. The effect of the 1835 Act was to destroy the political importance of the freemen, thus undermining their social and economic importance too, Membership of the class was restricted and had since dwindled very considerably.
It was clear a case had been made out under section 13(1)(d) of the 1960 Act for a scheme to be directed, enlarging the class of persons benefitting so as to include the inhabitants of Huntingdon as a whole.