Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 The dissenting speech of Lord MacDermott - Essay Example

The facts of the case were that trustees were directed to apply funds in providing for the education of children of employees or ex-employees or ex-employees of British American Tobacco or any of its subsidiary or allied companies. The employees numbered over 110,000. The House of Lords held that although the group of persons stated was numerous, the nexus between them wasemployment by a particular employer and thus did not satisfy the test of public benefit.5 Hence, what makes such individuals beneficiaries must not depend on their relationship with a particular individual, and must, therefore, not be ascertainable by reference to this personal tie.

However the ‘personal nexus’ test has been severely criticised,6 with Lord Macdermott stating in the House of Lords that categorising people is rarely as easy as a division between ‘personal’ and ‘impersonal’ and that many inconsistencies can arise from an artificial application of the test which may give rise to confusion and doubt. His Lordship stated, as an example, that a gift “to railwaymen working for a particular company” is likely to fail the nexus text due to the contractual relationship.

But a trust phrased in a non-personal way (for example “a trust for railwaymen working north of London”) would pass the nexus test and qualify as a charity. Hence MacDermott suggested that the test should be one of fact and degree rather than the nexus test- here the size and nature of the proposed charity should be considered. The Oppenheim decision has also been criticised by academics Parker & Mellows7 who referred to the fact that Oppenheim may have been decided on fiscal rather than legal reasons due to the possibility that companies could provide for tax perks by setting up an educational trust for its employees as charitable trusts are exempt from taxes.

Lord McDermott’s views were eventually approved in the later House of Lords case of Dingle v