The last essay¹Part 1 of 5. See https://www.gkg.legal/can-your-temple-own-the-land-it-stands-on/ left Mr. A standing in a solicitor’s office, holding a piece of land he wants to give to his temple: yet he is blocked by a rule that forbids his temple’s company to hold it.

The way out is older than the obstruction, and it is disarmingly simple.

Do not give the land to the company. Give it to people, to hold for a purpose.

What a trust actually is

Strip away the vocabulary and a trust is a division of labour over one thing.

One set of people holds the property. Their names go on the title. In the eyes of the Land Office they are the owners, and they can sign, sue, and be sued.

But they hold it for somebody else, or for something else. They take no benefit. They cannot sell it and keep the money, or move into it, or leave it to their children. If they try, the courts will stop them and make them account for every sen.

That second half — the conscience half — is the work of equity, the body of law the English Court of Chancery built up over centuries precisely because the ordinary law of property kept producing unjust results. It came to Malaysia by statute: our courts apply the rules of equity as they stood in England on 7 April 1956 — in Peninsular Malaysia, at least; Sabah takes 1 December 1951 and Sarawak 12 December 1949.²Civil Law Act 1956 (Act 67), s 3(1)(a), (b) and (c); cf s 6 (English land tenure and conveyancing not introduced).

So the temple’s land can sit on the title in the names of five committee members, and yet not belong to them in any sense they could spend.

Why a purpose, and not a person

Ordinarily a trust must have somebody who can enforce it. Give property to trustees “for good works” and the law asks: who may come to court and complain?

Charitable trusts are the great exception. They may exist for a purpose with no identifiable beneficiary at all, they are enforced by the Attorney General on the public’s behalf, and — this is the part that matters most for a temple — they may last forever. Ordinary gifts in perpetuity are struck down. Charitable ones are not.

Which raises the question the whole thing turns on. What counts as charitable?

£73, and a Moravian treasurer

In 1813, and again in 1815, a woman named Elizabeth Mary Bates conveyed lands in Middlesex to trustees.³Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531 (HL), the trust deeds of 11 February 1813 and 25 July 1815 at 541–542. The rents were to be divided into quarters. Two quarters went to missionary work among what the deed called the heathen nations, on behalf of a small Protestant church, the Unitas Fratrum — the Moravians. A quarter went to educating the children of ministers, with special regard for those least able to pay. The last quarter maintained the choir-houses, homes for the widows of missionaries and for single women who had taught until they could teach no more.

For seventy years the Revenue allowed the trust its income tax back, as charities were allowed. Then, in 1886, somebody at the Board changed his mind, and John Frederick Pemsel, the treasurer, was refused a refund of £73 8s 3d.

He sued. He lost in the Divisional Court, won in the Court of Appeal, and in July 1891 the House of Lords dismissed the Revenue’s appeal by four to two.

Lord Bramwell, dissenting, was splendidly unimpressed. Converting the heathen was benevolent, he said, but it was not charity; and he noted acidly that the effect of the majority’s decision was to make the State “a subscriber of £17 a year” to Moravian missions.⁴Pemsel (n 2), Lord Bramwell dissenting at 564 and 568.

But it is Lord Macnaghten’s sentence that survived, and it is still the working definition across the common law world.

“‘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.”⁵Pemsel (n 2), per Lord Macnaghten at 583.

Four heads. And the third of them is a temple’s, a church’s, a gurdwara’s, a mosque’s.

Lord Macnaghten, who knew exactly how odd the legal meaning had become, added a line I have never been able to improve on. Ask an educated man with no legal training what “a trust for charitable purposes” means, he said, and “I think he would most probably reply, ‘That sounds like a legal phrase. You had better ask a lawyer.’”⁶Pemsel (n 2), per Lord Macnaghten at 584.

But charitable is not enough

The third head admits your temple to the argument. It does not win it.

A trust for the advancement of religion must also be for the benefit of the public, or of a section of the public. That requirement stands separately from the four heads, it is applied strictly, and it has defeated arrangements a great deal more devout than anything discussed in this essay.

Consider two decisions of the House of Lords, two years apart.

In the first, money was settled on trust for the purposes of a Carmelite priory — a community of cloistered nuns who devoted their lives to prayer, contemplation, penance and self-sanctification within their convent, and who engaged in no exterior works at all. Nobody questioned the sincerity. Nobody suggested the purposes were not religious. Two benefits to the public were urged: that the nuns’ intercessory prayer brought about the spiritual improvement of others, and that their life of self-denial edified by example.

Both failed. And the House stated the governing principle in a sentence every trustee ought to know: the element of public benefit is essential to render a purpose charitable in law, and this applies equally to religious as to other charities.⁷Gilmour v Coats [1949] AC 426 (HL), headnote at 426–427, approving Cocks v Manners (1871) LR 12 Eq 574 and affirming the decision of the Court of Appeal sub nom In re Coats’ Trusts, Coats v Gilmour [1948] Ch 340. The benefit of intercessory prayer to the public, their Lordships held, is not susceptible of legal proof, and the court can act only on such proof. The element of edification by example was too vague and intangible to satisfy the test.

The lesson is uncomfortable and better stated plainly. Religion sincerely practised behind a wall is not, in law, charitable — because the public cannot reach the benefit.

The second case concerned a settlement directing income to be applied in providing for the education of the children of employees and former employees of British-American Tobacco and its subsidiary and allied companies. Those employees exceeded a hundred and ten thousand.

Not charitable either. Numbers were never the point. The nexus between the beneficiaries was employment by particular employers, and a class defined in that way does not satisfy the test of public benefit, however large it grows.⁸Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 (HL), Lord MacDermott dissenting.

Why this bites harder here than in England

Now count how many Malaysian religious trusts are defined in precisely that way.

The clan temple, for members of the association and their families. The family shrine, endowed by a founder for his descendants. The burial ground for one surname. The kongsi hall. The deed that names a village, and then names the families in it.

Every one of them is exposed to that second objection. And here is why it matters more than it looks. A trust that is not charitable is not perpetual. So the very feature the founder wanted above all — that the thing should last forever — is the first feature to fail.

The cure is in the drafting, and it is not difficult.

a.  Define the beneficiaries by locality or by faith, never by blood or by membership. For the advancement of the Hindu religion at the temple at Jalan X, for the benefit of worshippers there is charitable. For the descendants of the late Mr Y very likely is not, whatever the building is used for and however devoutly.

b.  If the doors are in fact open to any worshipper, say so in the deed. Many of these institutions are far more public in practice than their founding documents suggest, and it is the document a court will read.

c.  Where an existing deed is drawn the wrong way, take advice about correcting it now, while the founder’s intention can still be proved by people who are alive.

One technical point is worth knowing, because it settles the standing of both decisions in our courts. Each was decided before 7 April 1956, and the equity our courts administer is the equity of England as it stood on that date.⁹Civil Law Act 1956 (Act 67), s 3(1)(a). These are not foreign authorities a Malaysian judge may take or leave. They are part of the body of law that section brought in.

Why the Companies Act does not reach it

Now put the two halves together.

The prohibition in the last essay is addressed to a company limited by guarantee.¹⁰Companies Act 2016 (Act 777), s 45(4). That is its entire subject matter. Trustees holding land on a charitable trust are not a company limited by guarantee. They are individuals, and the rule does not speak to them.

This is not a dodge, and nobody need be shy about it. It is the ordinary consequence of a provision that Parliament aimed at one thing and not another.

There is better evidence still that our law contemplates exactly this arrangement. The Government Proceedings Act 1956, a federal statute, contains a section dealing with “any express or constructive trust for public, religious, social or charitable purposes”, and with proceedings to assert an interest in the trust property, to vest property in a trustee, and to settle a scheme.¹¹Government Proceedings Act 1956 (Act 359), s 9(1).

Parliament does not legislate about the property of religious trusts unless religious trusts hold property. The route is not merely available. It is recognised in the statute book.

The ninety seconds that decide everything

Here is the decision I promised at the end of the last essay, and it is made in the drafting room almost without thinking.

For whom are the trustees holding?

Get this wrong and the whole structure is exposed. If the deed says the trustees hold the land for the company — for the temple’s incorporated body as beneficiary — then in substance the company owns the land. It has the benefit; the trustees are a formality. And the Minister’s officer, or an opponent in litigation, will say precisely that: that the company is holding land through nominees, and that a statute is not defeated by putting other names on the title.

Get it right and there is nothing to attack. The trustees hold for the purpose — the advancement of religion at that place, and the maintenance of the building and its worship. The company appears in its proper role, as the body that administers and manages, not as the owner of anything.

The difference is one clause. It is also the difference between a scheme that survives scrutiny and a scheme that hands the argument to the other side.

Two weaknesses

So A can give his land after all. It goes to five named individuals, on trust for the advancement of his religion at that temple, forever.

But before anyone celebrates, two things need saying.

The title will show five men. It will not show the trust. To anyone searching the register, those five own a piece of land outright.

And the five are mortal.

That is the next essay.

You can view Part 1, Part 3, Part 4, and Part 5 here.

∞§∞

This article is written for a general readership and does not constitute technical or legal advice. Readers with legal questions are encouraged to seek independent legal advice.

The author thanks KN Geetha, TP Vaani, JN Lheela, and Lydia Jaynthi at GK Legal. Our gratitude to Frank Holleman of Unsplash for the image.

Claude, Anthropic’s AI, smoothed the drafting; Perplexity Pro checked the facts. The argument, the views, and the errors remain the author’s.

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