Dingle v Turner [1972] AC 601 (HL)

Facts

• The testator directed that money be held in trust to provide pensions for the "poor employees" of a company which he jointly owned.
• The beneficiaries were a class defined by their employment with the company, creating a personal nexus.
• The validity of the trust was challenged on the basis that it benefited a group limited by a personal connection, referencing the decision in Oppenheim v Tobacco Securities Trust Co Ltd and the application of the "Compton principle."
• The core legal question was whether a trust for the benefit of poor employees could qualify as charitable given the restriction on the class of beneficiaries.

Issues

1. Whether a trust for the "poor employees" of a company, being a class defined by employment (a personal nexus), can be a valid charitable trust.
2. Whether the "Compton principle" and the rule in Oppenheim v Tobacco Securities Trust Co Ltd prevent such a trust from qualifying as charitable.
3. Whether the relief of poverty provides a sufficient public benefit to override the exclusion created by a personal nexus among beneficiaries.
4. Whether fiscal (tax) privileges should influence the determination of charitable status.

Decision

• The House of Lords held that a trust for the benefit of "poor employees" may be a valid charitable trust.
• The Compton principle and rule in Oppenheim do not disqualify a trust aimed at the relief of poverty, even where beneficiaries share a personal nexus such as employment.
• The court distinguished trusts for poverty relief from those for other purposes (e.g., education), finding that poverty relief confers a public benefit regardless of the class's limitation.
• Lord Cross identified the need to distinguish between the charitable purpose test and entitlement to fiscal privileges, though later decisions did not follow his position on fiscal benefits.
• The decision confirmed that the focus on alleviating poverty overrides the personal nexus limitation in the context of charitable trusts.

Legal Principles

• The Compton principle, which precludes trusts from charitable status where beneficiaries are defined by a personal connection, does not apply to trusts for poverty relief.
• Relief of poverty is deemed to confer a public benefit even where the beneficiaries are members of a restricted group, such as employees.
• The primary factor for charitable status is the trust's purpose—if aimed at alleviating poverty, the limitation of the beneficiary class is secondary.
• The question of entitlement to fiscal privileges is analytically distinct from the question of whether a trust has a charitable purpose.
• Subsequent case law rejected the idea that charitable status should be influenced by the availability of tax exemptions, maintaining the independence of this question.

Conclusion

Dingle v Turner [1972] AC 601 (HL) established that charitable trusts for the relief of poverty may benefit a defined class, such as employees, without being invalidated by the personal nexus rule from Oppenheim. The case remains a leading authority that the relief of poverty fulfils the public benefit requirement for charitable trusts, regardless of restrictions on the class of beneficiaries. Lord Cross’s commentary on tax privileges was not followed in later law, but the central holding regarding poverty relief forms a clear exception to the Compton principle.