Income Tax Special Commissioners v Pemsel: HL 20 Jul 1891

Charitable Purposes used with technical meaning

The House was asked whether, in a taxing statute applying to the whole of the United Kingdom and allowing for deductions from and allowances against the income of land vested in trustees for charitable purposes, the words ‘charitable purposes’ should be understood according to their meaning in English law, or whether they should be given a meaning which was common to the law of England, Scotland and Ireland.
Held: (majority: Lords Watson, Herschell, Macnaghten, and Morris; Halsbury LC and Lord Bramwell dissenting) The deduction should be allowed.
The House defined what is meant at law by a charity. Lord Macnaghten said: ”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; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads. The trusts last referred to are not the less charitable in the eye of the law, because incidentally they benefit the rich as well as the poor, as indeed, every charity that deserves the name must do either directly or indirectly.’
Lord MacNaghten contrasted the systems of administrative law in England and Scotland: ‘By expounding the Act by analogy, and if you will apply your usual penetration to this point, you will find that there is often no other possible way of making a consistent sensible construction upon statutes conceived in general words, which are to have their operation upon the respective laws of two countries, the rules and forms whereof are different. These general views will probably always be taken from the language or style of one of these countries more than from the other, and not correspond equally with the genius or terms of both laws. You must then, as in other sciences, reason by analogy, or leave at least one-half of the statute without effect.’ It was argued that, although the words ‘charity’ and ‘charitable’ had a definite legal meaning in England, they could not be applied in the same way in Scotland unless they had a definite legal meaning there too: ‘That was not Lord Hardwicke’s view. He seems to have thought reflected light better than none.’ The words ‘ charity ‘ and ‘ charitable ‘ in the Income Tax Act, 1842 must be construed in their technical meaning according to English law.
The House discussed also the interpretation of statutes having effect both in England and Wales and in Scotland: ‘But in some cases certainly . . the statute proclaims its origin and speaks the language of the English lawyer, with some Scottish legal phrases thrown in rather casually. How are you to approach the construction of such statutes? We are not, I think, without a guide. It seems to me that there is much good sense in what Lord Hardwicke said in his well known letter to an eminent Scottish judge ‘you must’ he says ‘as in other sciences reason by analogy’ – that is, as I understand it, you must take the meaning of legal expressions from the law of the country to which they properly belong, and in any case arising in the sister country you must apply the statute in an analogous or corresponding sense so as to make the operation and effect of the statute the same in both countries. Thus you get what Lord Hardwicke calls ‘consistent, sensible construction”.
Lord Macnaghten discussed the development of the law of charity, saying of the 1601 Statute: ‘The object of that statute was merely to provide new machinery for the reformation of abuses in regard to charities. But by a singular construction it was held to authorize certain gifts to charity which otherwise would have been void. And it contained in the preamble a list of charities so varied and comprehensive that it became the practice of the Court to refer to it as a sort of index or chart. At the same time it has never been forgotten that the ‘objects there enumerated,’ as Lord Chancellor Cranworth observes, ‘are not to be taken as the only objects of charity but are given as instances’.’ and ‘I have dwelt for a moment on this point, because it seems to me that there is a disposition to treat the technical meaning of the term ‘charity’ rather as the idiom of a particular Court than as the language of the law of England. And yet of all words in the English language bearing a popular as well as a legal signification I am not sure that there is one which more unmistakably has a technical meaning in the strictest sense of the term, that is a meaning clear and distinct, peculiar to the law as understood and administered in this country, and not depending upon or coterminous with the popular or vulgar use of the word.’
Lord Macnaghten, Lord Watson, Lord Morris, Lord Herschell
[1891] AC 531, [1891] UKHL 1, [1891] UKHL TC – 3 – 53, (1891) 3 TC 53
Bailii, Bailii
Statute of Charitable Uses 1601
Cited by:
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ExplainedIn re Macduff; Macduff v Macduff CA 1896
Lindley LJ qualified the judgment of Lord Macnaghten in Pemsel: ‘Now Sir Samuel Romilly did not mean, and I am certain Lord Macnaghten did not mean, to say that every object of public general utility must necessarily be a charity. Some may be, and . .
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CitedLehtimaki and Others v Cooper SC 29-Jul-2020
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Lists of cited by and citing cases may be incomplete.
Updated: 24 August 2021; Ref: scu.220235