CHARITABLE TRUSTS BILL.

HL Deb 03 May 1853 vol 126 cc1009-22

Order of the Day for the Second Reading read.

The LORD CHANCELLOR

moved the Second Reading of this Bill, and said, it was he must confess, in his opinion, a scandal on the country that it should fall to the lot of any one in the year 1853 to propose the second reading of a Bill like the present, the object of which was to establish the means of efficiently administering and rendering useful the charitable trusts of this country. But so it was. This subject had been so often before their Lordships' House and the other House of Parliament, that he should deem it an unwarrantable waste of time if he went into any great detail as to what had already been done, or the course which legislation had taken, in connexion with this matter. It would be sufficient for him to call attention to the fact that it was now fast approaching forty years—considerably more than thirty-five years—since his noble and learned Friend (Lord Brougham), who was so much distinguished for his zeal and ability in reference to this subject, directed the attention of the House of Commons to the abuses, first of the educational chari- ties, and afterwards of the charities generally, throughout the kingdom. After one or two Motions, it was in 1818, that his noble and learned Friend first obtained an Act of Parliament which constituted the original Charitable Trusts Commission. It was supposed that the labours of the Commissioners appointed under that Act, of whom there were fourteen, eight of whom were paid, would be terminated in the course of two years. Their powers, in the first instance, were limited to educational charities, but afterwards they were extended generally to all charities; and it soon became perfectly manifest that it was a very delusive idea to suppose that the inquiries of the Commissioners could be concluded in that period. The Commissioners made several reports, and it was not unworthy of notice that so long ago as 1820, they made a report, in which they pointed out to the attention of the Legislature and of the country, that until some cheap and expeditions mode of dealing with the abuses of charities was instituted, all inquiry on the subject would be idle. The Commission to which he had referred continued its functions under Acts of Parliament until they terminated in 1830; but in the following year his noble and learned Friend (Lord Brougham), who was then on the woolsack, obtained another Act of Parliament, by which the Commission was renewed and continued to prosecute its inquiries until 1834; when that Commission also expired. In 1835, Parliament and the country being anxious to bring the matter to a close, a new Commission, consisting of not less than thirty members, was appointed, who had the duty imposed on them to terminate their labours in two years. They, consequently, investigated all, or nearly all, the charities in the country, not previously reported on, and their labours concluded in 1837. These various Commissions, from first to last, made no less than thirty-two reports, accompanied by a mass of evidence which would take almost half a lifetime to master. Their reports and evidence were contained in closely printed folio volumes; and he need hardly say that a work so voluminous carried with it the destruction of its own object, for the practical effect was that no person ventured even to look into it. Nevertheless, summaries of the evidence, and the reports of the Commissioners without the evidence, being more readable, the attention of Parliament was called to the subject, and after the lapse of two or three years, several attempts at legislation founded on the reports were made. It was quite unnecessary to give a minute description of all those attempts. He believed that the first attempt to introduce a Bill founded on the reports of the Commissions was made by a right hon. Friend of his (Sir G. Grey), in the other House, somewhere about 1840, but it ended in nothing being done. Then the Government of the late Sir Robert Peel took up the subject, and his noble and learned Friend who then held the Great Seal (Lord Lyndhurst), introduced a Bill on the subject in their Lordships' House in 1844, which, however, did not pass; and in 1845 the same Bill—at least, it was very much the same —was again introduced in their Lordships' House, through which it passed; but it was not taken up by the other House. In 1846 another Bill was introduced, but was not prosecuted to a successful issue; and there ended the attempts at legislation on the part of his noble and learned Friend (Lord Lyndhurst). The late Lord Cottenham, who succeeded to the woolsack, introduced a Bill on the subject in 1847, differing in some material respects from the measure of Lord Lyndhurst, which, not passing, was renewed in 1848, again in 1849, and again, he believed, in 1850. These frequent and ineffectual attempts at legislation, led, however, to the constitution of a new Commission, not like the former Commissions, which were composed of paid and professional members, but one under the sign manual, directed to several noble Lords—one of whom he saw opposite, who had rendered eminent service to his country, and to other Members of Parliament— a Master in Chancery, and barristers, who were instructed to look into the matter and the reports already made, and which from their voluminous character were too extensive for individual inquiry. In the course of the inquiries made by the Commissioners he had previously referred to, it must not be understood that they did nothing but make reports. Such a notion would constitute a very inadequate idea of the services rendered by them. They reported from time to time specific cases of abuse, to which the attention of the Attorney General was directed, and in 400 instances the Attorney General had prosecuted for abuse, and regained great sums for the benefit of the charities. Neither was the usefulness of these proceedings to be measured merely by the number of cases in which the Attorney General actually interfered, for the natural effect of their interference led to right being done in many other instances where under other circumstances the evil would have passed uncorrected. Still much remained to be done; for it was idle to talk of proceeding in the Court of Chancery as to the great bulk of these charities. It had been ascertained pretty accurately that the institution of proceedings in Chancery on the subject of a charitable fund which did not yield more than 30l. a year, would necessarily absorb the whole of the capital—from 600l. to 1,000l.—even if the parties prosecuting were successful. Therefore, though the Commissioners had done essential good with respect to the larger charities, yet the main mass of abuses, which consisted of abuses of the smaller charities, was perfectly irremediable by any existing means, and unless some other plan could be suggested. The number of charities to be investigated was stated at no less than 28,840: whether that was the whole number in the kingdom might be matter of doubt, but he would take it at that amount. It would be matter of surprise that of those 28,840 charities 22,760 were charities below 301. a year. Combining that with the statement he had previously made, the result was that not fewer than 22,760 charities were practically without the pale of the law—that there was no tribunal which practically was calculated to deal with them. That being so, the Commission to which he had last alluded —the one instituted under the sign manual —made a report on the subject eminently characterised by good sense, recommending that there ought to be not only a cheap mode of settling all matters connected with such trusts judicially, but that there ought to be some permanent, efficient, responsible body which should have the superintendence of them, and be placed in such a situation of authority that their control might be relied on. In pursuance of this report of the Commissioners, which was made in 1850, the Government in 1851 introduced a Bill embodying very many of their recommendations. That Bill was brought in by a noble and learned predecessor of his, not now in his place from illness (Lord Truro), and, after being read a second time, was referred to a Select Committee, where it underwent a long investigation, and received several material Amendments which were adopted by their Lordships, who passed the Bill, and sent it down to the other House of Parliament. Unfortunately, however, this occurred at too late a period of the Session to admit of the Bill passing through that House, and nothing was done with it then. One of the first acts of the Government in the succeeding Session of 1852 was to reintroduce the same measure in the House of Commons, which was done by the Attorney General. On that occasion the Bill was read a second time, he believed without discussion, a request having been made and complied with that the principle of the measure should be discussed on the Motion for the House going into Committee. But in the meantime a change of Government took place; the new Attorney General, Sir F. Thesiger, however, took up the Bill, moved that it should go into Committee, and, in a very able and lucid statement, explained what were its objects. From some cause, however, with which he (the Lord Chancellor) was unacquainted, the Bill was dropped, and did not pass. It now, therefore, became the duty of the present Government to take up the subject again. In doing so the Government claimed very little credit for originality. Some change it had become necessary to make, for this reason:—The judicial machinery proposed by the former Bill provided that the case of charities under 30l. should be dealt with by the County Courts; from 30l. to 100l. by the Masters in Chancery; and above 100l. by the Court of Chancery. Some change was forced on them, however, because the office of Master in Chancery, as a tribunal, was abolished. As regarded the Board of Superintendence proposed by the Commissioners, the recommendation was that it should be a Board consisting of two or three paid and unpaid Members. Now, in considering the change it had become necessary to make in the judicial tribunal, the Government took it into their serious consideration whether a useful change might not be made also in the constitution of the Board; and, on both these subjects, the one being a change called for by necessity, and the other a change desirable but not the result of necessity, he would state to their Lordships what the present Bill proposed. In the first place, they must consider what would be the duties of the Board. The duties of the Board would be to exercise a general superintendence over all the charities of the kingdom, at no expense whatever to the smaller charities; indeed, be might say, at no expense to any. One of the most efficient modes— and that, perhaps, on which practically everything would turn—for making the plan efficient, would be to make it the imperative duty of the trustees of every charity to keep regular accounts of all their receipts and expenditure, be the sums great or small; and annually to deposit a copy of them with the clerks of the County Courts, and another copy to be submitted to the Board in Loudon, where they would be always accessible to inspection. This provision of itself, he apprehended, would have a most material effect in preventing abuses. And, when he said "abuses," he thought it right to state his belief that nine-tenths of the abuses that existed were the result of ignorance. He believed that when accounts were regularly rendered, and the attention of all parties concerned drawn to the nature of the expenditure, the greater part of these abuses would be corrected. The Board would also be called on to perform a function that would be exceedingly useful, and which had been recommended by the Commission. It often happened that the trustees who administered the funds of charities were at a loss in particular cases how to act; and it was proposed that they should be at liberty, without expense, and merely by writing to the Secretary of the Board, to obtain in such cases the advice of the Board as to what they should do, which would indemnify them till corrected by the judicial tribunals. He did not mean to say that this was a course absolutely free from difficulty; but, considering the nature of the case, and that it was impossible to have an actual legal investigation, there was at least some advantage in arriving at an approximation to a removal of the evils, and he believed that for such a purpose this would be found an essentially useful provision. He was the more inclined to think this from what he had been informed on the best authority, that endless letters were now received from persons asking what they ought to do in certain given circumstances, but which letters there was no competent authority to answer. There was another function which the Board would have to exercise that he regarded as also one of the greatest importance. It was proposed that they should have the power of directing legal proceedings to be instituted; and, what was of not less importance, of forbidding them to be instituted. Gross abuses had arisen in many cases from parties not being called to account; and there had also been abuses not less gross, leading to results not less ruinous to the charities, from the insti- tution of proceedings. It was no new tiling that proceedings of this kind should he under the control of a public Board, and of a Government Board, because in form they never could be instituted without the sanction of the Government—that was to say, the Attorney General—though it was no contradiction to say that the Attorney General had no adequate machinery for investigating whether a man was acting for the benefit of a charity when he instituted proceedings, or whether they might not have been dictated by some low professional person, who wished to make again of the matter. It was proposed, therefore, that the Board should have control over all legal proceedings—that none should be instituted without their sanction—and none ended without their approval. The Bill contained another clause to which he attached great importance—it applied to a class of cases, in which it was most important that all who had the management of trust property should have the power of dealing with it in the same manner as individuals. Cases often arose in which the interests of a trust required that the trustees should have power to build houses, to exchange land, and sometimes to purchase and to sell land. In some cases trustees were invested with this power, in others not. Where there was no power in the trustees to do these things, it was sometimes necessary to apply to Parliament at a great expense—never less, he believed, than 600l. Now it was proposed that in all these cases this Board should have the power of authorising the trustees to do that which under their ordinary powers they would not have the power to do, and for which consequently they would otherwise have to apply to Parliament to acquire power to do. All these were powers that were proposed to be conferred upon the Board as it was constituted by the former Bill; and on that part of the case he did not anticipate there would be any real difference of opinion. The present Bill proposed to give to the Board powers that were not given to the Board as constituted by the Bill of 1851, and to these it was possible some of their Lordships might have an objection. In the first place, many of these charities, though they were covered by the name of "charities," were anything but beneficial to the recipients. There were none of their Lordships who had made the least inquiry into such matters who had not heard the greatest complaints made of the nuisance created by what was called "a charity" in a town where it existed. The reports made on this subject were rife with this sort of cases, and it would be idle and pedantic in him to call their Lordships' attention to many of them; but he might mention one or two instances. There was a village on the confines of Radnorshire in which there was a charity called "Jarvis's Charity," of 3,000l. or 4,000l. a year, where the fund was appropriated to provide meat, drink, and physic for the poor, with an express prohibition against the trustees devoting any part of the funds to building. In consequence of the existence of this charity, cottages had become exceedingly numerous in the neighbourhood, a large influx of inhabitants from the neighbouring villages took up their residence there, and the amount of immorality, vice, and profligacy which prevailed was frightful, so much that the charity had become an intolerable nuisance. Proceedings were instituted in order to get rid of the nuisance. The case was brought before the Court of Chancery; but that Court having no power to legislate on the subject, all that they could do was to execute the trust according to the will of the founder, and sanction an application to Parliament for the purpose of getting a portion of the fund devoted to the building of schools and the education of the poor of the parish. In the town of Macclesfield and Sandbach certain funds of a charity were devoted to almshouses, and others to schools. The school fund was not sufficient for the purpose, and the almshouse fund was more than was required, and, as in the former case, great abuses were the consequence. Here, again, the Court of Chancery authorised an application to Parliament for an Act to enable the parties to devote a portion of the alms fund to the erection of schools. Now, in the case of a great charity, there were the means of setting matters right; but in the case of the poor charities such means did not exist. What was urgently required in such cases as these was some mode of dealing with the property, instead of going through this expensive process, the great expense of which prevented the smaller charities from effecting desired improvements. The Bill, therefore, proposed to give to the Board the power of dealing with the charities in four instances, namely, first, where the object of the charity had wholy failed, and it had become impossible to carry it into effect; secondly, where the object itself had not failed, but where it had failed of doing what might be supposed to have been the intention of the founder, or tended to the encouragement of pauperism or immorality; thirdly, where two or more charities existed for somewhat similar purposes, but the funds of neither were sufficient for its own object, but when united they might do good; fourthly, where in the case of charities which had been founded above sixty years—it was not proposed to touch modern charities—it was found that the result expected was totally inadequate to the funds applied to it; in each of these cases it was proposed that the Board might sanction a different application of the funds, with, however, some necessary safeguards. First of all, if the trustees who had the management of a charity concurred with the Board in thinking that the alteration was necessary, then the Board might frame a new scheme for the application of the funds to useful instead of injurious or useless purposes. The new scheme in which both thus concurred would be laid before both Houses of Parliament; and if neither House, by resolution, objected to it within three months, then the scheme was to have the same power as if authorised by Act of Parliament; if, however, the trustees did not concur, all the Board could do was to lay their scheme before Parliament; and then, instead of a private Bill being introduced at great expense, Parliament was authorised to interfere if it thought fit, by a Public Act. He could not but think that this was a power that should be lodged somewhere, even at the risk of giving too great a power to some one-body; but, unquestionably, it was a power which should be in the hands of persons whose conduct would be before the public, and whose motives were not likely to be called in question. It was with that view that, in conferring these high privileges, the Government thought the Government itself should he responsible for any advice given; and instead, therefore, as was proposed in the Bill of 1851, of having two paid Commissioners and two unpaid, it was proposed to make the Board a branch of the Government, including in it the Lord President of the Council, and other Members of the Cabinet—one or more of the latter to be Members of the House of Commons—and three Members of the Privy Council, who should appoint two legal gentlemen of high attainments, upon whom of course the more laborious part of the business would devolve, to be inspectors; and they were also to appoint another legal gentleman of standing to be their secretary. In the former Bill it was proposed that the expense of the Commission should be defrayed by levying a small tax on all the charities; but when the matter came to be investigated it was found that the collection of such a tax would be attended with enormous difficulties. There were not fewer than 13,000 charities under 5l. a year— there were many thousands under 2l. a year; and what kind of machinery would it not require to collect a tax that in some cases would amount to only a penny or twopence a year? And it would be unfair to expect that the larger charities should bear all the expense. The Government, therefore, having considered the matter, had come to the conclusion that, considering the great benefits which would be conferred upon the community by the better management of charitable trusts, it would probably not be too much to say that the expense, which would not be more than 5,000l. or 6,000l a year, should be paid out of the public exchequer. The two legal Members of the Board should go into the country and make inquiries on the spot in every case which required investigation. It was also proposed that the two gentlemen connected with the Board as Inspectors should be deputed to visit different towns and report upon charities, as occasion required, for the purpose of bringing justice home at once to the door of the different charities. It might be objected that the clauses of the Bill relating to this part of the subject would invest those officers with inquisitorial powers. But we had to deal with a choice of difficulties, and it was not likely that more inconvenience and danger would result from the exercise of these powers than from leaving matters as they were; and as the results of these inquiries and the reports of the inspectors would be made public, and submitted to Parliament, he apprehended that no objection could be taken to this portion of the Bill. And now, with respect to the judicial tribunals for dealing with the charities. The present measure adopted the provision contained in the last Bill for giving the County Courts jurisdiction over all charities not exceeding 30l. in amount. The County Court Judges were, he believed, zealous and learned persons, and, with the safeguards provided by the Bill, no real mischief was likely to arise from intrusting the Judges of the County Courts generally with this new jurisdiction. The former Bill proposed that all charities above 30l., and up to 100l., should go before a Master in Chancery, and all above 100l. before the Lord Chancellor. No good reason was apparent for maintaining this distinction, and therefore it was now proposed that all cases above 30l. should go before the Master of the Rolls or one of the Vice-Chancellors, at Chambers, without any information, bill, or petition, who was to be at liberty, in any case of extraordinary importance, to direct a bill or petition to be filed for the purpose of bringing the matter under the jurisdiction of the Court itself. He had now stated the chief provisions of the measure; and if their Lordships should read it a second time, he would, in accordance with a suggestion made on a former evening, move that it be referred to a Select Committee when the details might be fully considered and discussed.

Moved —That the Bill be now read 2^a.

The DUKE of CLEVELAND

was understood to say that he considered the Bill was a decided improvement upon the former measure, and that the noble and learned Lord was entitled to the thanks of the House for having introduced it.

The EARL of CHICHESTER

, as one who had taken a great interest in the question, also expressed his thanks to the Lord Chancellor for having brought in so very important and practical a measure as that which was now before the House. The noble and learned Lord had correctly stated that the greater part of the Bill was precisely the same in principle as the Bill which two years ago passed their Lordships' House; and he might remind their Lordships that the Bill was, in fact, the Bill prepared by the Charity Commission, with some very slight alterations, and which was afterwards brought in by the Government of the noble Earl opposite (the Earl of Derby). He certainly thought, however, that the proposed change in the constitution of the Board was a great improvement on the former measure; and though large powers were proposed to be given to the Board by the Bill, which were not contemplated by the Charity Commission, still the reasons given by the noble and learned Lord for conferring such powers appeared to be valid and sound; and the question was one rather of prudence and policy than of principle. He hoped the Bill, in all its principal enactments, would receive the sanction of their Lordships.

LORD BROUGHAM

, after complimenting the noble Earl who spoke last on the diligent attention which he had always be- stowed on this important matter, of which he had great official experience, said he entirely concurred in the opinion which had been expressed, believing it to be the most useful measure that had been introduced on the subject. There were one or two points with respect to which he entertained doubts, that might be removed by further explanation. Discussion in a Committee would probably reconcile all differences of opinion. It was his bounden duty, as having presided over the celebrated Committee of the Commons, to concur in the testimony which the noble and learned Lord had borne to the value of the Commissions of 1816℃18, appointed by the Acts passed at the instance of that Committee. No man could have traversed the country in any direction during the last forty years and not see, rising before his eyes, monuments to the importance of their labours. It would be erroneous to estimate the beneficial results of the labours of those Commissions merely by the 400 cases which they caused to be brought into Chancery for investigation, because, in a multitude of other instances, the mere apprehension of inquiry led to the discontinuance of abuses, and the revival of charities gone into disuse. In justice, however, to the trustees, he was bound to express his firm belief that in a great majority of cases the abuses arose not so much from corruption, from wilful diversion and misapplication of the funds, as from negligence, ignorance, and carelessness: this was particularly the case as regarded the smaller charities. He had the greatest confidence that the provisions of this Bill would meet all such cases, and he trusted it would receive the sanction of their Lordships.

LORD ST. LEONARDS

would hesitate long before consenting to give the Board the powers which the Bill proposed to confer upon them. Up to this moment such powers had never been intrusted to individuals in this country. The constitution of the Board itself appeared to be objectionable—it was to be constituted in point of fact by the Government for the time being. Either the Board would exercise its power upon all matters brought before it, when they would inevitably become party questions, or the business would be left to the two barristers, who were to become the working and influential men of the Commission; and undoubtedly these great powers were not such as could safely be committed to any two men. Among other things, power was given them to alter the application of a failed charity, whatever might be its amount. Now, the first question which arose with respect to a failed charity was whether the property should go to other charities, or revert to the donor. It was worthy of consideration whether it would not be expedient to appoint a Board to determine these questions, so as to render it unnecessary to apply to Parliament in each case; but such a Board, to obtain public confidence and respect, must be very differently constituted from the Board proposed to be established under the present Bill. One word in regard to the misapplication of charity funds. It appeared to him that in a vast number of cases of small charities the trustees had been guilty not so much of breach of trust as of errors of judgment. This opinion was founded on his experience as a member of the Charity Commission; for he was a member, although, by some accident, his name did not appear in the Report.

LORD BROUGHAM

Because you never attended.

LORD ST. LEONARDS

I beg my noble Friend's pardon. I attended more frequently than he did.

LORD BROUGHAM

Oh dear, no!

LORD ST. LEONARDS

I attended regularly, almost every day, but I never saw my noble and learned Friend there, except on the first day.

LORD BROUGHAM

said, his noble and learned Friend appeared to be gifted with a faculty for the possession of which he had never before given him credit—namely, the imaginative. His learned Friend had drawn extensively upon his imagination when he said that he attended to the Commission every day, but never saw him there; and he (Lord Brougham) must acknowledge that he was also in error in supposing that his noble and learned Friend had never attended, for, on consulting with a Member of the Commission now below the bar, he was reminded that an arrangement had been made by which he and his noble and learned Friend attended on alternate days. Under these circumstances, it appeared that they were now both in the wrong; and their Lordships would perceive it not only natural, but unavoidable, that he and his noble and learned Friend should never see each other at the Commission, because, from the arrangement made, it was impossible they could both be present at the same time.

EARL TALBOT

said, as the law stood at present, the funds of any charity were mulcted one way or another of no less a sum than 200l. on the appointment of fresh trustees for its management; and on such occasions there was a sum of 25l. paid to the Attorney General, who had nothing to do in the matter. He hoped the noble and learned Lord on the woolsack would introduce a provision into the Bill to remedy that inconvenience and expense.

The LORD CHANCELLOR

said, there was a special provision in the Bill to meet the objections of the noble Earl.

Bill read 2^a, and referred to a Select Committee.