Lords Sitting of 26 June 1851

MINUTES.
PUBLIC BILLS.—1a Smithfield Market Removal.
2a Patent Law Amendment (No. 3); Bridges (Ireland); Fee Farm Rents (Ireland); Charitable Trusts.
Reported.—Stamp Duties (Ireland) Continuance.
3a Office of Messenger to the Great Seal Abolition; Marriages (India); Process and Practice (Ireland).

CHARITABLE TRUSTS BILL.
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR,in moving the second reading of the Charitable Trusts Bill said, that he was sure he need not occupy the time of their Lordships by impressing upon them the importance of this measure. The subject had been under the consideration of Parliament for the last seventy years—from 1786, when Parliament authorised certain returns regarding those Charities to be laid upon the table of the House, down to the present period. In the interval five separate Commissions had been appointed to inquire into the subject, four of them were under the authority of Parliament, and the last under the sign-manual of Her Majesty. These Commissions had presented thirty-two Reports, giving full information on the subject. The result of these inquiries showed that there were 28,840 charities in England and Wales, of which there were 13,000 and upwards whose annual incomes, by endowment, were less than the value of 5l. There were 5,000 more whoso incomes were under 10 l. a year, and there were
1246
from 4,000 to 5,000 others whose incomes were under 100 l. From this statement, it was obvious that the smaller charities could ill afford the expenses of litigation; for any inquiry into the administration of a charity with an income of 5l. a year, or perhaps less, would swallow up many years' income of that charity. The Commission acting under the last sign-manual presented two Reports, which were extremely valuable from the nature of the information which they contained. That Commission consisted of three noble Lords Members of that House, three Members of the House of Commons, a Master in Chancery, and a Barrister, who acted as honorary Secretary. Its labours were indefatigable, and in the course of his communication with it, he could not too highly praise the zeal of its highly-gifted secretary (Mr. Tierney); what was a very unusual circumstance with Commissions in general, its expenses were extremely light, and were little more than the price of the stationery which they consumed. The Reports to which he alluded, naturally called the attention of Parliament to the fact, that since 1840 various Bills, which had for their object the remedy of the grievances arising out of the disposition of charitable trusts, had been introduced, all of which had unfortunately failed to receive the approbation of the House. In 1845, his noble and learned Friend, Lord Lyndhurst, brought in a Bill upon this subject, which passed through their Lordships' House unanimously, and was sent down to the House of Commons; but matters of very great importance then occupied the attention of that House, and the then Government declined to press it forward that Session. Again, in 1846, a Bill to effect the same object was introduced; that Bill was strongly opposed by several noble and learned Lords, and it failed to receive the sanction of the House by a majority of two. In the present measure he had endeavoured to avoid the objections urged against the Bill of 1846, without impairing its general efficiency. The labours of the last Commission had induced the Government to prepare the present Bill; and he was afraid that should it fail, after the attention which had been bestowed upon it, as well as upon previous Bills, there would be little chance of successfully dealing with a subject which was universally admitted to require legislative interference. Before giving an outline of the measure for which he asked their Lordships' support, he would call attention

1247
to what appeared to the late Commission, as well as the previous Commissions, the principal cause of the abuses which had crept into the administration of the charities of this country. Although the gentlemen who were the administrators of these establishments were, he doubted not, most honourable men, yet, through inadvertence or carelessness, the records of the Court of Chancery showed so many cases of inadvertence, negligence, or misapprehension of their duties, as would warrant the House in the assumption that they would be more efficiently performed if a superintending guardianship were extended over them. As to what exemptions from the operation of the Bill there might be, or whether there should be any, would be matter for grave consideration when the Bill went before a Select Committee. One of the great causes of abuses in the administration of these charities was a want of publicity—a want of some check and audit to the accounts. There had been no one charged with the particular duty of investigating these accounts, and one charity had lost 30,000 l. from that cause. In another case a renewal rent of 2l. per annum had been taken for a property which had now been let for 1,500 l.; and in many cases rentcharges had come to be considered the permanent value of the charity. It had also happened that, upon the death of a trustee, no successor was appointed to him, and that the money invested was allowed to come into the hands of a single trustee, who died or failed, and then it was discovered that he had failed to discharge his trust. Various other evils would be found recorded in the report presented by the last Commission, which, although brief, was most satisfactory. It was considered by most competent authorities, that the very existence of such a body as he proposed to form under this Bill, would prevent more than one-half the evils complained of. The importance of this question could not be over-estimated. It had been shown, by sworn testimony, that the annual income of the charities in the United Kingdom amounted to the sum of 1,200,000 l. By the present Bill it was proposed to establish a board of five Commissioners, to be called "The Charity Commissioners," two of whom should be paid, and that they should form a corporation, with power to make the inquiries referred to in Clauses 8, 10, and 11 of the Bill. The Commissioners should also be invested with the power of issuing precepts
1248
for the production of accounts and documents, and examining parties, under certain circumstances. They would have the power of giving advice when asked for by the trustees, and the trustees should be indemnified for any act they might commit while acting under any advice so given. Thus the trustees hereafter would be acting under protection, and would not be exposed to such grievous inconvenience and expense. They had also the power of certifying to the Attorney General such cases as they might think fitting for his interference; and on that certificate legal proceedings for the recovery of sums due to these charities might be instituted. Many cases were even now instituted by the Attorney General, and others by private relators; but these informations led to expensive Chancery suits, and it was too often found that when the attorney's costs were satisfied, the suits dropped. Although there had been many cases of fraud brought to light, through the instrumentality of private relators, it was not considered right I that power of proceeding by information against trustees should be allowed, without the sanction of the Commissioners.; By another clause the Judges of the County Courts were to have jurisdiction in cases of charities, the incomes of which did not exceed 30 l. Should, however, the Commissioners or other parties be dissatisfied with the order of the County Court Judge, they might remit the case to him for reconsideration, or transfer the matter to a Master, or the Court of Chancery. In the case of charities exceeding 30 l., and not exceeding 100 l., application must be made directly to a Master in Chancery, who was authorised to proceed on a state of facts laid before him, and to make such orders as might now be made by the Court itself. Provision was made that the accounts of the disbursements and receipts of the trustees of charities should be annually delivered to the clerks of the County Courts for the districts in which the charities may be situated. The accounts were to be registered in the County Courts, and open to inspection at all seasonable hours on payment of the fee of 1s. The Commissioners were called upon annually to lay their accounts and a report of their proceedings before both Houses of Parliament. It was proposed that the expenses of the Board and of the working of the law, should be defrayed by a tax of 2d. in the pound imposed upon the in-comes of all charities exceeding 10 l. It

1249
was estimated that this tax would produce 8,500 l. Provision was made for the union of small charities. With regard to the questions of leasing, building, management of mines, repairs, &c., instead of referring such subjects to the Lord Chancellor, the Commissioners would have the power of dealing with them. There was also a power to compromise disputed claims, and a provision for the union of small charities. The Bill dealt with permanently endowed charities only, and none of its provisions would extend to charities supported by voluntary subscriptions. Several petitions had been presented praying to be heard by counsel against the Bill; but surely their Lordships knew all that could be advanced for or against the measure, and might dispense with the speeches of counsel.
Moved—That the Bill be now read 2a.
LORD BROUGHAMgreatly rejoiced that this Bill had been proposed by Her Majesty's Government. A measure of this nature had been long wanted, and its absence had worked grievous injustice and oppression. The noble and learned Lord had understated the evils of which he complained, and he had also understated the efficient powers of the Bill to remedy those evils. The noble and learned Lord might have stated that not only in cases of charities with incomes of 5l., but even in those of incomes of 100 l., parties interested were prevented by law expenses from appealing to a court of justice to prevent malversation with respect to charitable funds; for what charity with an income of even 100 l. or more could afford the expenses and the grievous delay of a Chancery suit? There had been many instances in which individuals had wrongfully possessed themselves of messuages belonging to charities, and had openly avowed their misdeeds, safely relying on the dread of legal expense to deter any one from calling them to account. That such a state of things should have been allowed to continue for so many years in a country professing to be civilised and governed by law, was no less astonishing than humiliating. The powers of inquiry given by the Bill were most necessary. That the mere inquiry would be beneficial, he knew, from the experience of the well-known Committee of 1818, and the Acts passed in consequence. It was a most pleasing thing to those who had taken part in that inquiry, that when they traversed the country they could in so many places see
1250
the inscription of almshouses, or schools, erected since the year 1818. He did therefore most heartily rejoice at the introduction of the Bill before their Lordships; but as it was going before a Select Committee, he would abstain from making any further observations upon it. With respect, however, to the principle of the Bill, he hoped no doubt whatever would be entertained by their Lordships, though the question as to the limits might certainly give rise to some discussion. He did not know why 30 l. and 100 l. had been fixed upon as limits to found the jurisdiction of the County Court Judge and the Master in Chancery respectively. With regard to the jurisdiction intended to be conferred on the County Courts, he would ask how long and how often were they to load those County Courts with new business? Would it be fair to throw this additional labour on the County Court Judges without giving them increased remuneration? He would venture to recommend to his noble and learned Friend on the woolsack the great propriety of considering that topic in the further progress of the measure. He rejoiced to see his noble Friend's conversion to the belief in County Courts, as testified by this Bill. He was not a postulant, but a convert. With those observations he most heartily concurred in the second reading of the Bill, and would express his confident hope that it would be allowed to pass without any unnecessary delay.
LORD STANLEYsaid, no one, he believed, had the slightest inclination to offer any opposition to this Bill; for the abuses which it was intended to remedy had existed for a long series of years. If there could be any doubt as to the propriety of adopting this measure, there could be none whatever with regard to any transactions of the Commissioners who had investigated this subject. His only apprehension was, as on a former occasion to which his noble and learned Friend had referred, that a vast pressure of important business in the other House of Parliament in the present Session might render it possible for a Bill which only went before the other House on the last day of June, or the 1st day of July, to run some risk of not passing through all its stages there before the close of the Session. If that should prove to be the case, it would be to him a matter for great regret, for he did think the legislation contemplated by this Bill was of the most useful and practical character. He

1251
might be permitted to call their Lordships' attention to the principle on which it appeared control was necessary. The grounds on which it was thought to be necessary, as stated by the noble and learned Lord on the woolsack, appeared to be the possible ignorance or corruption of the party administering the charity, the absence of a visitor, the absence of an effective audit, and the absence of any sufficient motive on the part of the governing body to exercise due vigilance over the objects of the charity. He must, therefore, for a moment call their Lordships' attention to the case as it was put forward by the great London companies. They were not exempted from the operation of this Bill. It could not be contended, with regard to the governing bodies of any one of those charities, that they were likely to be ignorant of the estates that were devised to them. [The LORD CHANCELLOR: They may be ignorant of the objects for which the estates were devised.] It certainly did appear singular that public bodies who had been in possession of estates for hundreds of years, should be so very ignorant of the purposes to which the trusts that had been reposed in them were applicable. But the fact was that those companies were composed of a body of men of perpetual succession; and upon that ground there was no danger of their trusts lapsing. There was, moreover, a regular annual audit of their accounts by persons who were elected by the great body intended to be benefited by the application of the trusts, and the charities were for the most part founded by deeds of gift of former members of the Corporation. It was true that the body which was appointed by the existing members of the Corporation, administered not only the funds derived from its existing members, but the funds derived under the wills of their predecessors; but, certainly, if the audit was regular, he could scarcely conceive it possible, if there was any ignorance on the part of the governing body, as to the objects and purposes of their property, that that ignorance should not soon be discovered and corrected; and it certainly did appear to him that there was not the slightest danger of any of the trusts lapsing by the failure of individual members, though these charities did stand on a footing different from the ordinary charitable trusts in the country. The noble Lord concluded by stating, that as the governing bodies of those charities would have an opportunity of stating their case
1252
before the Select Committee, he would not further occupy their Lordships' time.
THE EARL OF CHICHESTERsaid, the noble and learned Lord on the woolsack had alluded, in terms of praise, to the labours of the Commission of which he (the Earl of Chichester) had the honour to be a Member, and from whom this measure had originated. He could claim no share in that praise, for the part he had borne in those labours had been a very humble one. With regard to the Bill itself, their Lordships would recollect that the measure introduced in 1845 was, in many respects, similar to the present Bill. In the Bill before their Lordships, though a very important control over charities would be given to the new Commissioners, their functions would be rather those of inquiry, supervision, and advice, than of jurisdiction. They were to exercise a controlling authority over the County Courts, but not exactly in the nature of an appeal. He apprehended there would be some objection taken to the narrowness of the clause which exempted a certain class of charities. In 1845, Lord Lyndhurst's Bill was referred to a Select Committee, containing, he believed, among its members all the law Lords attending their Lordships' House, and several right reverend Prelates, who formed a most effective and satisfactory Committee for the investigation and discussion of such a subject. When that Bill was first introduced, it contained a clause which he believed only exempted three charities; but on its leaving the Committee they were unanimous in doing away with all exemptions. The Bill introduced in 1846 did contain an exemption, but that exemption only extended to the Universities. With regard to the great London charities, some of the very best of them had been proved to be charities which did require some occasional inquiry into their modes of management, and that it would be of great advantage to them if their accounts were made out and registered in the way proposed by the Bill, and if they were afforded some more satisfactory means of correcting any faults of their own management. He had always looked at those charities as deriving a very great advantage in connexion with this Bill, seeing that they would receive a considerable boon in the way of protection against vexations litigation. There were certain charities, as their Lordships well knew, which were mainly supported by annual and voluntary contributions. It was the inten-

1253
tion of the clause, as it originally stood, to exempt those charities, if they were entirely so supported, and if their accounts were regularly laid before the subscribers once a year. Some of those charities, however, were endowed to a very small amount; but still, being endowed, they would come under the provisions of this Bill. He thought that would be an advantage to those charities; but by necessity those charities could not be exempted without exempting almost all the charities which this Bill was intended to reach and control.
LORD STANLEYthought it would be difficult, in the case of charities partly endowed and partly supported by annual voluntary subscriptions, to separate the money derived from interest on sums invested in the funds from the ordinary annual subscriptions.
THE LORD CHANCELLOR,in reply, said, that cases had been known in the law courts where even public companies of the highest respectability had run into abuses for want of a suitable audit, and instanced a case which had come under his notice when practising at the Bar, in which a public charity had been involved in a lawsuit, and seriously prejudiced, by the ignorance of the governing body as to the nature and limits of the trusts reposed in them. It was for the purpose of obviating this want that the present Bill had been introduced, and he trusted its provisions would be found available for the purpose.
On Question, Resolved in the Affirmative.
Bill read 2a accordingly; and referred to a Select Committee.
House adjourned till To-morrow.