The court considered the investment policy of the respondents and was brought by the then Bishop of Oxford (and two other priests) against the Church Commissioners in relation to their investment policy concerning South Africa. At the time South Africa was transitioning to democracy and there were a range of views within the Church of England about the appropriateness of investing in South Africa. The Church Commissioners’ charitable objects were ‘financial assistance for clergy of the Church of England’. In that sense, the Bishop of Oxford (himself a Church Commissioner) and the other Claimants could be said to be beneficiaries. The Church Commissioners already had in place an ethical investment policy that excluded investments in armaments, gambling, tobacco and newspapers. They also had an express policy in relation to investments in South African companies but the Claimants considered that it did not go far enough and sought stricter investment criteria for such investments. However the actual declarations that they were asking the Court to make did not refer to South Africa and were in quite general terms: ‘(1) That the commissioners . . are obliged to have regard to the object of promoting the Christian faith through the established Church of England; and (2) that in the exercise of those functions . . may not act in a manner which would be incompatible with that object.’
The Vice-Chancellor set out the fundamental principle underlying the exercise of any power by charity trustees:
‘It is axiomatic that charity trustees, in common with all other trustees, are concerned to further the purposes of the trust of which they have accepted the office of trustee. That is their duty. To enable them better to discharge that duty, trustees have powers vested in them. Those powers must be exercised for the purpose for which they have been given: to further the purposes of the trust. That is the guiding principle applicable to the issues in these proceedings. Everything which follows is no more than the reasoned application of that principle in particular contexts’.
Dealing specifically with the power of investment, the Vice-Chancellor said that maximising financial return is the ‘starting point’ because charities always need more money: ‘prima facie the purposes of the trust will be best served by the trustees seeking to obtain therefrom the maximum return, whether by way of income or capital growth which is consistent with commercial prudence. That is the starting point for all charity trustees when considering the exercise of investment powers. Most charities need money; and the more of it there is available, the more the trustees can seek to accomplish.
In most cases this prima facie position will govern the trustees’ conduct. In most cases the best interests of the charity require that the trustees’ choice of investments should be made solely on the basis of well-established investment criteria, having taken expert advice where appropriate and having due regard to such matters as the need to diversify, the need to balance income against capital growth, and the need to balance risk against return’.
Commonly referred to as the Bishop of Oxford case
Judges:
Sir Donald Nicholls VC
Citations:
[1992] 1 WLR 1241, [1993] 2 All ER 300
Jurisdiction:
England and Wales
Cited by:
Cited – Butler-Sloss and Others v The Charity Commission for England and Wales and Another ChD 29-Apr-2022
Principles allowing Ethical Investment by Trustees
Should charities, whose principal purposes are environmental protection and improvement and the relief of poverty, be able to adopt an investment policy that excludes many potential investments because the trustees consider that they conflict with . .
Lists of cited by and citing cases may be incomplete.
Trusts, Charity
Leading Case
Updated: 04 May 2022; Ref: scu.556390
