This page intentionally left blank The Law of Charitable Status This in-depth commentary on the Charities Act 2006 outlines the new requirements for qualifying as a charity and examines the concept of ‘public benefit’ The author, a former Charity Commission lawyer who has practised in charity law for twenty years, conducts a theoretical and empirical analysis of the reasons that charitable status might be removed by the Charity Commission, looks at the position of charitable property when institutions cease to be charitable and examines the likely effect of the independent Charity Tribunal on the appeals process The post-Act treatment of controversial charities is also explored is a partner at the London and Cambridge offices of Stone King Sewell LLP Solicitors, having previously been a lawyer with the Charity Commission He holds a PhD in charity law and is a visiting lecturer at Cambridge University R O B E RT M E A K I N The Law of Charitable Status: Maintenance and Removal ROBERT MEAKIN CAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521516037 © Cambridge University Press 2008 This publication is in copyright Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press First published in print format 2008 ISBN-13 978-0-511-46376-1 eBook (EBL) ISBN-13 978-0-521-51603-7 hardback Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate Contents Table of Cases Table of Statutes Introduction Introduction Basic propositions Summary of the book Why the power to remove charities from the register is important The importance of the charity sector in the delivery of public services Tax reliefs Donors Law reform Introduction to the general law The register of charities The Commission’s powers of removal General approach to writing the book Essential indicia of charitable status Introduction A legal obligation to carry out the charitable purposes One or more of the three certainties is lacking Certainty of words Certainty of subject matter Certainty of objects Express clauses in a governing instrument which prevent charitable status The charitable objects are too widely drafted Jurisdiction Charitable purposes What are charitable purposes? The Commission’s dilemma Objects or activities? page xi xviii 1 4 6 8 10 12 12 14 18 18 19 19 20 22 23 23 24 26 27 v Contents The objects are ambiguous There is a doubt about whether the objects are charitable The objects not pass the public benefit test Sham charities Objects or activities: Conclusion Fine distinctions Public benefit Introduction What is public benefit? Why is public benefit important to the question of removal now? Problem areas in the law of public benefit Little analysis by the court Public benefit differs from one head of charity to another The balance between public and private benefit Harm or benefit? Emphasis on form over substance Anomalous decisions The concept of public benefit changes with time Public benefit conclusion Viability Independence from the state Conclusion vi The powers of the Commission to remove charities from the register Introduction ‘No longer considers is a charity’ ‘Ceased to exist’ ‘Does not operate’ Rectification Summary ‘No Longer considers is a charity’ Never a charity Never had the essential indicia of charitable status Sham charities Change in the law Mistaken understanding of the law Distinguishing decisions of the court Removal on a different ground Making law Cy-pres application of property where the institution was never a charity Special trusts Rectification 28 29 30 31 31 32 34 34 34 34 35 35 36 37 37 38 41 41 42 42 43 43 45 45 45 50 50 52 52 52 53 53 54 57 59 60 65 65 67 69 69 Contents An institution was a charity but is no longer charitable Introduction Cy-pres where the institution was a charity but is no longer charitable ‘Any change in its trusts’ ‘Ceased to exist’ Trusts Trusts without permanent endowment Trusts with permanent endowment Unincorporated associations Companies limited by guarantee Striking off Petitions to wind up a company The survival of charity following dissolution Restoration to the register Bona vacantia property applied cy-pres by the Crown Special trusts The survival of charity following dissolution – Conclusion ‘Does not operate’ Conclusion Limits on the Commission’s powers to remove controversial charities from the register Introduction Charities connected to the state Why are charities connected to the state controversial? Possible grounds for removal Critical analysis of the possible grounds for removal How the critical analysis supports the basic propositions Charitable schools which charge fees Why charitable schools which charge fees are controversial Possible grounds for removal Critical analysis of the possible grounds for removal How the critical analysis supports the basic propositions New religious movement charities Why new religious movement charities are controversial Possible grounds for removal Failure to demonstrate public benefit Not promoting a religion for the purposes of charity law Critical analysis of the possible grounds for removal Failure to demonstrate public benefit Not promoting a ‘Religion’ for the purpose of charity law How the critical analysis supports the basic propositions Conclusion 71 71 71 73 75 76 76 77 80 80 81 81 81 82 82 83 83 83 84 85 85 85 86 86 87 89 89 89 90 91 93 94 94 94 94 95 97 97 99 102 102 vii Contents viii Property Introduction The position of the Commission What is ‘charity’? The institution was never a charity The institution was a charity but has ceased to have charitable purposes What happens to the property of a charity which is removed from the register? Conclusion The Commission’s powers of investigation and the use of those powers to remove charities from the register Introduction Powers of investigation and protection Sections 18(1) and 19 protective powers Section 18(2) protective powers Appointment of additional trustees Appointment of an interim manager Making schemes Removal of trustees The institution of the inquiry leads the trustees to conclude that they should dissolve the charity New powers under the Charities Act 2006 Documentary analysis Does not operate Ceased to exist Change in trusts No longer considers is a charity Conclusion How the Commission’s powers to remove charities from the register may be affected by changes to the law of charitable status Introduction The Human Rights Act 1998 Public authorities Does the Human Rights Act 1998 apply to the removal of charities from the register? General principles and limitations Limits on Convention rights Prescribed by law Necessary in a democratic society 103 103 103 104 105 108 112 113 114 114 114 115 116 116 117 118 119 120 120 121 121 123 123 124 124 126 126 128 129 130 132 133 133 136 Bibliography Claricoat, J and Phillips, H Charity Law A-Z Key Questions Answered, 2nd edn (Bristol: Jordans, 1998) Dicey, A V An Introduction to the Study of the Constitution (1885), 10th edn (London: Macmillan, 1959) Dunn, A The Voluntary Sector, the State and the Law, 1st edn (Oxford: Hart, 2000) Gold, R with Evans, N and Coleman, D Running a School 2004/5 Legal Duties and Responsibilities, 2nd edn (Bristol: Jordans, 2005) Hems, L and Passey, A The Voluntary Sector Almanac (London: NCVO, 1998/9) Lester and Pannick Human Rights Law and Practice, 2nd edn (London: LexisNexis UK, 2004) Lewis, C Judicial Remedies in Public Law, 2nd edn (London: Sweet and Maxwell, 2000) Luxton, P The Law of Charities, 1st edn (Oxford University Press, 2001) Maxwell Interpretation of Statutes, 12th edn (London: Sweet and Maxwell, 1969) Meakin, R Charity in the NHS: Policy and Practice, 1st edn (Bristol: Jordans, 1998) Moffat, G Trusts Law: Text and Materials, 3rd edn (Cambridge University Press, 1999) Morris, D Charities and the Contract Culture: Partners and Contractors? Law and Practice in Conflict (Liverpool University Charity Law Unit, 1999) Schools – An Education in Charity Law, 1st edn (Aldershot: Dartmouth, 1996) Nathan The Charities Act 1960, 1st edn (London: Butterworths, 1962) Picarda, H The Law and Practice Relating to Charities, 3rd edn (London: Sweet and Maxwell, 1999) Riddall, J G The Law of Trusts, 6th edn (Oxford University Press, 2002) Thomas, R Legitimate Expectations and Proportionality in Administrative Law, 1st edn (Oxford University Press, 2000) Venables, R and Kessler, J Tax Planning and Fundraising for Charities, 5th edn (London: Key Haven, 2003) Wade, H W R and Forsyth, C F Administrative Law, 8th edn (Oxford University Press, 2000) 203 Bibliography Wainwright, Clark, Griffith, Jochum & Wilding The UK Voluntary Sector Almanac 2004, 5th edn (London: NCVO, 2006) Warburton, J Tudor on Charities, 9th edn (London: Butterworths, 2003) West, E Companies Limited by Guarantee, 2nd edn (Bristol: Jordans, 2004) Williams, I The Alms Trade: Charities Past, Present and Future, 1st edn (London: Harper Collins, 1989) Articles ‘A Joint Opinion by Anthony Lester and David Pannick’ (ISIS document no.11) April 1987 ‘Administration of Justice A Time for Everything Under the Law: Some Reflections on Retrospectivity’ Roger, A LQR 2005, 121 (Jan) 57–79 ‘Blair to Assign NHS Role to the Voluntary Sector’ Third Sector 21 June 2006 ‘CBI Criticises Complexity of Tribunal System’ Com.Law 2006, 26 (12) 368–369 ‘Charitable Companies Ceasing to be Charitable’ Dutton, J 7, CL & PR, 1, 2001 ‘Charitable Trusts in India’ Duruvala, N B Offshore Investment May 1995 ‘Charitable Trusts-Unique’ Warburton, J (1999) 63 Conv, Jan/Feb ‘Charities and Political Activity: Time to Re-think the Rules’ Birt, E The Political Quarterly, 23, 1998 ‘Charities and the Contract Culture: Partners or Contractors? Law and Practice in Conflict?’ Morris, D Liverpool University Charity Law Unit, 1992 ‘Charities and the State’ Garton, J 14 Tru LI 93, 2000 ‘Charities, Politics and Freedom of Speech’ Morris, D 5, CL & PR, 3, 1999 ‘Charities that Charge: The Impact of the Strategy Unit Report and the Charities Bill 2004’ Christopher McCall QC and Guy Newey QC, Maitland Chambers, July 2004 ‘Charity Appeals in the High Court: Practice Problems and Reform’ Fryer, J.M 36 NLJ (Ann Charity Rev.) 20, 1986 ‘Charity Cheats Laid Bare – By You’ Levine, T The Guardian 25 August 2007 ‘Charity in its Political Voice – a Tinkling Cymbal or a Sounding Brass?’ Santow G.F.K., 18 Aus Bar Rev 225, 1999 ‘Charity, Politics and the Human Rights Act 1998: Chasing a Red Herring?’ Moffat, G 4, IJNL, 1, 2001 ‘Compact Table of Shame’ Plummer, J Third Sector, 14 February 2007 ‘Conflicts of Interest in Charity Law’ Luxton, P The Voluntary Sector, the State and the Law ed Dunn, A (Hart Publishing, 2000) ‘Drawing a Line’, Third Sector February 2006 ‘Endowed Charities: A Total Return Approach to Investment?’ Dutton, J 7, CL & PR, 2, 2001 ‘Human Rights and Charity Law’ Warburton, J S J 144 (17) Supp 24–26, 2000 ‘Legal Issues in Charity Mergers’ Morris, D Liverpool University Charity Law Unit 2001 ‘New Religions and Ethical Movements as Charities’ Picarda, H 131 NLJ 436, 1981 204 Bibliography ‘Permanent Endowment and Total Return’ Hill, J and Smith, J 7, CL & PR, 2, 2001 ‘Poor Little Rich Schools’ Guardian Education, 23 April 2002 ‘Power Without Accountability The Charity Commission as Regulator’ (Association For Charities Report 2004) ‘Public Benefit in Charities’ Atiyah, P.S 21 MLR 138, 1958 ‘Public Charitable Collections: Are they a Worthwhile Cause?’ Barker, C R 63 (6) MLR 791–812, 2000 ‘Retirement and Removal of Trustees’ Phillips, A Trusts and Estates Law Journal, July/August 1999 ‘Sector is Losing Out to Private Bids’ Third Sector, 31 January 2007 ‘Super Charities Charter’ Aldridge, N Society Guardian, June 2004 ‘The Charitable Status of Rifle Clubs: the Explosion Occurs’ Clarke, P 2, CL & PR, 2, 1993/4 ‘The Draft Charities Bill Public Benefit and the Advancement of Religion’ Quint, F Charity Law Association, July 2004 ‘The Judge as Law Maker’ Lord Reid 12 J.S.P.T.L (N.S) 22, 1972–1973 ‘The Trustees Right to Silence-Lessons from the Guiness Trial’ Wilson, T and Meakin, R NGO Finance, Feb/March 1996 ‘Watch Out There’s A Charity About’ King, J The Spectator, 28 October 2000, 30–31 ‘What are the Boundaries between “Public Sector” and “Charity”?’ Cairns, E Charitable Schools and What Needs to be Done? ed Mountfield Directory of Social Change 1992 Government Publications Charities and Not-for-Profits A Modern Legal Framework: The Government’s Response to Private Action, Public Benefit (Home Office, 2003) Compact: Getting It Right Together (Cm 4100, 1998) Consultation on the Review of Charities Administration in Northern Ireland in 2005 (Department for Social Affairs, 2005) Efficiency Scrutiny of the Supervision of Charities (HMSO, 1987) Getting Britain Giving: Inland Revenue Guidance Note (2000) Higher Standards, Better Schools For All: More Choice for Parents and Pupils (Cm 6677, 2005) Independent Complaints Reviewer to the Charity Commissioner for England and Wales Annual Report 2005/06: Seeking a Fair Resolution Private Action, Public Benefit: A Review of Charities and the Wider Notfor-Profit Sector (Cabinet Office, Strategy Unit 2002) Racial Disadvantage (Cm 8476, 1982) Report, Formal Minutes and Evidence (Joint Committee on the Charities Bill, HL Paper 167–1, HC 660–1, 2004) Rights Brought Home (Cm 3782, 1997) The Future Role of the Third Sector in Social and Economic Regeneration: Final Report, July 2007 (Cm 7189, 2007) 205 Bibliography The Role of The Voluntary and Community Sector in Service Delivery: A Cross Cutting Review (Treasury, 2002) Working Together: Co-operation between Government and Faith Communities (Home Office Faith Communities Unit, 2004) Charity Commission Publications CC – Public Benefit Tests-How We Will Carry Them Out? (2004) CC – Review of the Register General Key Messages, Questions and Answers (2001) CC – The Promotion of Human Rights (2002) CC – Campaigning and Political Activities by Charities (2004) CC 20 – Charities and Fund-raising (2001) CC 47 – Complaints about Charities (2003) [1966] Ch Com Annual Report [1977] Ch Com Annual Report [1978] Ch Com Annual Report [1979] Ch Com Annual Report [1983] Ch Com Annual Report [1985] Ch Com Annual Report [1987] Ch Com Annual Report [1996] Ch Com Annual Report [1998] Ch Com Annual Report [2000/1] Ch Com Annual Report Ch Com Dec Vol (1993) Ch Com Dec Vol (1994) Ch Com Dec Vol (1997) Consultation on Draft Public Benefit Guidance (February 2007) Consultation Paper: Decision Review-Reconsidering the Commission’s Decisions (2007) Consultation Paper: Review of the Commission’s Complaint and Customer Feedback Procedures (2007) OG 17 Removal of Organisations from the Register (2007) OG 71 Human Rights Act 1998 (2000) OG 93 Complaints About the Commission’s Standard of Service (2003) OG 94 Requests For A Decision To Review (2003) OG 202 Small Charities: Dissolutions and Removals from the Register (2007) Public Benefit – the Charity Commission’s Approach (January 2005) Public Benefit – The Charity Commission’s Position on how Public Benefit is Treated in the Charities Bill (July 2005) Review of the Register General Key Messages, Questions and Answers (2001) RR – The Review of the Register of Charities (2001) RR a – Recognising New Charitable Purposes (2001) RR – The Promotion of Urban and Rural Regeneration (1999) RR – The Relief of Unemployment (1999) 206 Bibliography RR – The Promotion of Community Capacity Building (2000) RR – Maintenance of an Accurate Register of Charities (2000) RR – The Independence of Charities from the State (2001) RR – The Public Character of Charity (2001) RR – Preservation and Conservation (2001) RR 11 – Charitable Status and Sport (2003) RR 12 – The Promotion of Human Rights (2005) RS4 a – Collaborative Working and Mergers: Summary (2003) 207 Index 46115 (Scots Guardsman) Steam Locomotive Trust, 120 brain washing, 94, 152 access to justice British Atlantic Committee, 161 costs, 173, 188–91 British Humanist Association, 147, 148 law reform, 200–2 Business in the Community, 26 need, 2–3, 171 right to fair hearing, 178–9, 180, 185–6 capital gains tax, 69 Adam Smith Institute, 160 ceasing to exist Alzheimer’s Foundation, 117 charitable companies, 80–3 Amnesty International, 28–9 Commission decisions, 123, 148 Animal Abuse, Injustice and Defence removal powers, 9, 50, 75–83 Society, 23 trusts, 76–80 annual returns, 123 types of governing instruments, 75 anti-vivisection, 23, 38, 57, 72–3 unincorporated associations, 80 appeals certainty See also judicial review creation of trusts, 15, 18–19 alternatives, 191–3 objects, 15, 19–20, 22–3, 28–9 costs, 173, 188–91 removal powers and, 13 direct removal, 174–5 subject matter, 15, 19 grounds, 172 change See social change problems, 172 charitable companies rehearings, 174, 177–8 ceasing to exist, 80–3 Tribunal powers, 174 cy-pres schemes, 82 from Charity Tribunal, 175 loss of charitable status, 73 indirect removal, 175–7 property, 111 grounds, 172 problems, 172–3, 177 restoration to register, 50, 75, 80, 81–2 rehearings, 177–8, special trusts, 83 striking off, 81 Tribunal powers, 175 survival following dissolution, 81–3 winding up, 81 Bacon, Francis, 33 charitable purposes bad faith, 187 See also specific purposes beneficiaries See public benefit ambiguous objects, 28–9 bias, 184–5 case law bona vacantia, 50, 75, 82 208 Index fine distinctions, 14, 32–4 paucity, 13, 23, 27, 49 convents, 150 definition, 13–14, 47 widening, 198–9 determination Commission powers, 23–4, 58–9 Commission’s dilemma, 26–7 constructive approach, 26 contemporary context, 25, 26 extrinsic evidence, 28, 30, 31 objects or activities, 27–8, 31–2 social context, 62–5 drafting legal obligation, 14–23, misleading drafting, 28 too wide drafting, 22–3 dubious objects, 29–31 duplication, 42, 110–11 judicial changes, 57–9 judicial presumption in favour of, 42 legal requirements, 23–34 meaning, 24–6 1601 definition, 24 2006 list, 24 listed categories, 24–5 unlisted categories, 25, 27 non-exclusively charitable purposes, 20–2 amendment of instruments, 20 construction, 25 incidental purposes, 25 severance, 23, 25 validation, 25 novel purposes approach, 27 Commission powers, 59 consideration of activities, 30 dubious legal basis, 27 paucity of case law, 49 politics and, 32, 157, 159–60, 166–7 promotion of human rights, 127, 167 public benefit test, 30–1, 34–42 renewing, sham charities, 31 social change and, 62–5, 72–3 specific charitable purposes, 108 timing of consideration, 14 viability, 12, 14–18, 42, 196 charitable status See also charitable purposes Commission power to determine, 58–9 independence from state and, 12, 43, 53, 86–9 indicia, 9, 12, 53–4 clarification need, 13–14 jurisdiction and, 23 loss See loss of charitable status paucity of modern decisions, 172, 174 charitable trusts amendment of instruments, 20, 21, 124 breach of trust, 32, 54, 125 certainty of objects, 15, 19–20, 22–3, 28–9 certainty of subject matter, 15, 19 certainty of words, 15, 18–19 changes, loss of charitable status, 73–5, 123–4 charitable objects, 20–2 creation, 15 definition, 15–16, 73 dissolution, 20–1 endowments spending, 78, 79–80 transfer to other charities, 76, 77, 78–9 variation of terms, 79–80 legal obligation to charity, 14–23, loss of charitable status, 73–5, 111 sham trusts, 56 special trusts, 69, 83 termination, 76–80 cy-pres schemes, 76 no permanent endowment, 76–7 permanent endowments, 77–80 reverter provisions, 21, 76, 78 time charities, 21, 76, 78 trust deeds, 18, 19, 77 charities See also charitable status controversial charities See controversial charities definition, 14–18, 24, 46, 47, 104–5 tightening, 197 inactive charities, 83–4, 103, 110 independence from state, 12, 42, 53, 86 209 Index charities (cont.) institutions, 15–18 mergers, 110–11, 197 registration See registration of charities removal See removal statistics, 4–5 Charity Commission Annual Report (1967), 53 Annual Report (1976), 95 Annual Report (2001), 110 application for restoration of companies to register, 82 charitable purposes and dilemma, 26–7 powers, 23–4 complaints procedure, 192, 193 constitution, 46 cy-pres schemes See cy-pres schemes decisions ceasing to exist, 123, 148 change in trusts, 123–4 de facto law-making, 2, 13, 27, 58, 65–7, 126 inconsistency, 114, 125 mistaken registrations, 53, 124 not operating, 121–2 overview, 121–4 proportionality, 125 representations, 171 statistics, 121 think tanks, 161–2 delay, 192 guidance See guidance historical development, 47–8 internal reviews, 173, 191 investigations, 114–15 jurisdiction concurrent with High Court, 46 determination of charitable status, 58–9 no law-making powers, 2, 46–50, 85, 89, 93, 102, 109, 199, 200 legal status, 46–7 natural justice and, 186–7 objectives effective use of resources, 103 good governance, 196 property, 103–4 210 petitions for winding up, 81 protective powers See protective powers public authority status, 26–7, 47, 129, 130 registration See registration of charities review of judicial decisions, 48–9, 58–9 review of Tribunal decisions, 172, 174–5 charity proceedings, 188, 189 Charity Tribunal accessibility, 201 appeals from, 175 appeals to See appeals costs, 189–91 establishment, 2, judicial review, 173, 178, 184 jurisdiction, 27, 172, 174, 200 right to appeal to, 121 Christian Corps International, 124 Church of Scientology, 55, 94, 95–6, 97–8, 100–1, 129, 142, 148–9 collecting boxes, 107–8 community benefice, 24, 36 community interest companies, 74 Compact, complaints procedure, 192, 193 Compton test, 36, 38–40, 133–6, 140 conditional gifts, 19, 42 conflicts of interest, 88 conscience See freedom of thought and religion consolidation of charities, 110–11, 197 construction industry, 87–8 contextual interpretation, 51–2 contract culture, 6, 86 contracts for sale of land, 16 contractual undertakings, 16–17 controversial charities fee-charging schools, 89–93 charitable activities, 92–3 grounds of controversy, 89 human rights, 152 public benefit, 90–3, 153–5 removal grounds, 90–3 new religious movement charities, 94–102 meaning of religion, 95–7, 99–102 Index public benefit, 94–5, 97–9 removal grounds, 94–102 Scientology, 55, 94, 95–6, 97–8, 100–1, 129, 142, 148–9 source of controversy, 94 worship, 99, 100–2 state-connected charities, 85–9 grounds of controversy, 86 removal grounds, 86–9 convents, 150 Cooke of Thorndon, Lord, 130 corporal punishment, 156 costs, 173, 188–91 Crown, parens patriae, 17, 19 cy-pres schemes bona vacantia, 50, 75, 82 case law, 62 charitable trusts, 76 Commission objectives, 104 governing instruments and, 104–5 inactive charities, 110 legal effect, 75 loss of charitable status, 71–3, 109–12 making a case for, 47 mistaken registrations, 67–8, 106, 107–8 notification, 68 operation, 50 property rights and, 137, 139 social change, 72–3 socio-economic circumstances, 110 suitability, 1, 13, 42, 43 debtors, directions to, 116 declaratory theory of judicial decisions, 57–8 delay, 192 democracy freedom of expression and, 158 limits on human rights and, 136, 151, 165 discrimination comparable situations, 143–4 different treatment, 141–3 education, 155–6 freedom of expression and, 165–6 indirect discrimination, 142–3 overview, 140–5 reasonable justifications, 144–5 legitimate aims, 144 margins of appreciation, 145 proportionality, 144 religion, 141–3 dissolution of charities charitable trusts, 20–1 protective powers, 120 survival of charitable companies, 81–3 donors general charitable intentions, 108 mistaken registrations, refunding, 106, 107–8 notification of termination of trusts, 78 notifying cy-pres schemes, 68 public policy, Dormant Accounts Project, 103 duplicating charities, 42, 110–11 Ebony Housing Project, 122 education charitable purpose, 24 Compton test, 38–40, 133–6, 140 definition, 161 discrimination, 155–6 fee-charging schools, 89–93, 152, 153–5 forty-letter alphabet, 32–3, founder’s kin cases, 41, 58 grammar schools, 152–3 identity of Shakespeare, 33 literacy scores, 92 politics or, 60 public benefit test, 36, 38–40 right to education, 152–3, 157 sham charity, 56 special educational needs, 92 employment, charitable purpose, 26, 53, 87–8 endowments permanent endowments, termination of trusts, 77–80 spending, 78, 79–80 transfer to other charities, 76, 77, 78–9 variation of terms, 79–80 estoppel, 180, 182–3, 187 Exclusive Brethren, 98 extrinsic evidence, 28, 30, 31 211 Index fair hearing, right to, 178–9, 180, 185–6 faith communities, foundation schools, freedom of expression limits, 162–5 authority and impartiality of judiciary, 164–5 democratic necessity, 165 legitimate aims, 163 others’ protection, 164 prescribed by law, 162–3 non-discrimination and, 165–6 overview, 157–67 political objects and, 157, 159–60, 166–7 priority, 131 proportionality, 158 think tanks, 157, 160–2, 165 freedom of thought and religion absolute right, 145 corporate entities, 146 definition of religion or belief, 146–9, limits, 149–52 democratic necessity, 151 prescribed by law, 151 protection of health and morals, 151–2 protection of others’ rights, 151 overview, 145–52 priority, 131 fund-raising methods, 118 remuneration for fund-raisers, 198 good faith, 185, 187 governance Commission objectives, 104 conflicts of interest, 88 failures, 176 good governance, 196 problems, 84 governing instruments amendment, 20, 21, 74 charities ceasing to exist and, 75 determination of charitable purposes and, 27–8, 31–2 drafting, too wide charitable objects, 22–3 212 legal status, 18 non-exclusively charitable purposes, 20–2 property and, 2, 103, 104–5, 198, 199 removal from register, 114 significance, 17–18, 104–5, 198, 199 grammar schools, 152–3 guidance fee-charging schools, 91 human rights, 127 independence from state, 43 political activities, 32 public benefit, 135–6, 168 removal of charities, 50 sport charities, 67 gun clubs, 10, 60–2, Hands of Hope Children’s Cancer Fund, 123 Hansard, 51 harm, concept, 37–8, 98–9 Heavitree Social Centre, 123–4 Hind, Andrew, 90 Howard League for Penal Reform, 165 Hubbard, Ron, 96 human rights See also specific rights and freedoms 1998 Human Rights Act application to remove cases, 130–1 impact, 126–8 overview, 128–9 precedents, 129 public bodies’ obligations, 129–30 statutory interpretation, 130 2006 Charities Act, 127–8, 167 balance of individual and public rights, 132 charitable purpose, 127, 167 Commission guidance, 127 general principles, 132–3 institutions, 131 jurisprudence, 129 limits, 133–6 democratic necessity, 136, 151, 165 prescribed by law, 133–6, 139–40, 151, 162–3 proportionality, 127, 132, 134, 139, 144, 158 Index margins of appreciation, 131, 132–3, 145 rights relevant to removal cases, 126, 136–7 humanism, 147, 148 right to fair hearing, 180, 185–6 statutory appeals and, 172 ultra vires acts, 184–5 Wednesbury unreasonableness, 184–5 jurisdiction, charitable status and, 23 inactive charities, 83–4, 103, 110 income, minimum incomes, 50, 83 incorporation, 16 independence, 12, 42, 53, 86 Independent Complaints Reviewer, 192, 193 India, 195 industry, advancement, 26 inheritance tax, 69–70 Institute for Public Policy Research, 161 Institute of Economic Affairs, 160 institutions human rights and, 131 meaning, 15–18 intangible benefits, 38 interim managers, 116, 117–18, 172, 177, 185 International Redevelopment Foundation, 122 interpretation rules contextual interpretation, 51–2 Convention Rights and, 130 noscitur a sociis, 16 social evolution, 62–5 use of Parliamentary material, 51 investigations, 114–15, 175 Iran Aid, 118–19 land conveyancing, 16 law reform Charities Act 2006, 4, 7, 167–9 suggestions, 194–9 Leather, Suzi, 90 legal proceedings charity proceedings, 188, 189 consent, 188 costs, 173, 188–91 legal representation, 190 legitimate expectations, 180–2, Lester, Anthony, 146, 158 Life Builders International Network, 122 liquidations, 81, 120 literacy scores, 92 Lords Day Observance Society, 165 loss of charitable status charitable companies, 73, 111 charitable trusts, 73–5, 111 Commission decision, 123–4 cy-pres schemes, 71–3, 109–12 date of loss, 52, 70–1 property and, 108–12 removal powers, 12, 71–5 Review of Register and, 110 social change, 72–3 tax reliefs, 52 trust changes, 73–5, 123–4 unincorporated associations, 112 lotteries, 107 Jehovah’s Witnesses, 143, 149–50 judicial review applications, 189 bias, 184–5 Charity Tribunal, 173, 178, 184 direct removal, 179–82 greater access, 201 grounds, 172–3 indirect removal, 184–7 jurisdiction, 173 legitimate expectations, 180–2, natural justice, 186–7 overview, 177–87 protective costs orders, 189, 201 Majuba Hill, 61, 62 Margaret Thatcher Foundation, 161–2 margins of appreciation, 131, 132–3, 145 Martin Foundation Trust, 123 Masonic lodges, 36 mergers, 110–11, 197 miners’ welfare trust, 168 mistaken registrations Commission decision, 53, 124 Commission law-making, 65–7 cy-pres schemes, 67–8, 106, 107–8 213 Index mistaken registrations (cont.) distinguishing overruled precedents, 60–5 mistaken understanding of law, 59–67 no indicia of charitable status, 53–4 overruled precedents, 57–9 property and, 105–8 rectification of register, 52, 69–71 removal powers, 45, 53–71 sham charities, 9, 31, 54–6 social change, 62–5 special trusts, 69 tax reliefs, 69 Mujaheddin el Khalq, 118 Nathan Report (1962), 16, 17, 51 National Council for Voluntary Organisations (NCVO), National Health Service, 5, 43 natural justice, 186–7 negligence, statements, 183, 187 New Zealand, 196 North Tawton Rugby Union Football Club, 65–7 noscitur a sociies, 16 not operating breaches of trust, 125 Commission decisions, 121–2 minimum incomes, 9, 50, 83 removal powers, 50–2, 83–4 Oak House Charity, 56 OECD, 92 Official Custodian, vesting property in, 115, 199 Ombudsman, 192–3 Pagan Hospital and Funeral Trust, 148 Pannick, David, 158 parens patriae, 17, 19 Parliamentary Ombudsman, 192–3 Phab Harwich, 122 Phillips of Sudbury, Lord, 93 Picardia, Hubert, 96 political purposes, 32, 157, 159–60, 166–7 poverty relief charitable purpose, 24 public benefit standard, 36, 41 214 precedents distinguishing, 60–5 human rights, 129 overruling, 57–9 paucity of modern decisions, 172, 174 social change and, 62–5 professional charities, 63–5 property apportionment of funds, 19 Commission objectives, 103–4 conditional gifts, 19, 42 cy-pres schemes See cy-pres schemes dissolution of trusts, 20–1 effective use, 103 funding from state, 87 governing instruments and, 2, 103, 104–5, 198, 199 increasing protection, 197, 199 loss of charitable status, 108–12 charitable companies, 111 charitable trusts, 111 unincorporated associations, 112 new Commission powers, 120–1 post-removal holdings, 13 protecting property of ex-charities, 197 protective powers, 115, 116 removal from Register, 112–13 residuary legacies, 19 reverter provisions and, 21, 76 time charities, 21 transfer to other charities, trusts, 76, 77 vesting in Official Custodian, 115, 199 property rights Compton test and, 134 deprivation of possessions, 138 limits prescribed by law, 139–40 proportionality, 139 public interest, 138 removal powers and, 137–40, tax reliefs, 138 proportionality, 125, 127, 132, 134, 139, 144, 158 protective costs orders, 189, 201 Index protective powers appeals, 172, 175–7 appointment of interim managers, 116, 117–18, 172, 177, 185 appointment of trustees, 115, 116–17, 177, 185 Commission decisions, 121–4 Commission objectives, 104 conditions, 115 directions, 116, 120–1 dissolution of charities, 120 investigations, 114–15, 175 judicial review, 184–7 making schemes, 116, 118–19 overview, 114–21 permanent actions, 116 powers under 2006 Act, 120–1, 175 property directions, 115, 116 removal and, 10 removal of trustees, 116, 119–20 replacing trust deeds, 77 representations, 171 temporary powers, 115–16 public authorities definition, 129 obligations under Human Rights Act, 129–30 ultra vires acts, 26–7, 47, 184–5 public benefit abolition of presumption, 10, 35 2006 Act, 127, 168–9 non-discrimination, 141–3 anti-vivisection, 23 application of test, 54 case law inconsistency, 14, 41 paucity, 14, 35–6 clarification need, 93, 102 Commission guidance, 135–6, 168 Compton test, 38–40, 133–6, 140 concept of harm, 37–8, 98–9 differing standards, 36 enclosed orders, 150 evolving concept, 41 fee-charging schools, 90–3, 153–5 form over substance, 38–41, 198–9 government policy, 35 intangible benefits, 38 meaning, 7, 34 new religious movement charities, 94–5, 97–9 private/public balance, 37 professional charities, 63–5 requirement, 12, 34 significance, 34–5 test, 30–1, 34–42 Public Concern at Work, 26 public policy See also Strategy Unit increasing reliance on charity, 4–6, public benefit presumption and, 35 public representations, 201–2 public services, charities and, 4–6, 86 racial harmony, 62–3, 163, 166 Reading Medical and Rescue Unit, 119–20 receivers, 116, 117–18, 172, 177, 185 recreational charities, 167–8 rectification, 52, 69–71 registration of charities applications, 31, 95 Church of Scientology, 55, 94, 95–6, 97–8, 100–1, 129, 142, 148–9 Commission law-making, 65–7 exemptions, introduction, legal requirements, mistakes See mistaken registrations objectives, removal See removal removal of governing instruments, 114 review of judicial decisions, 48–9 Review of Register, 10, 26, 58–9, 110 registration of companies charitable companies, 50 restoration, 80, 81–2 striking off, 81 religion See also freedom of thought and religion charitable purpose, 24 Christian Corps International, 124 Compton test and, 36 definition, 127, 146–9, 215 Index religion (cont.) enclosed orders, 150 Exclusive Brethren, 98 meaning, 95–7, 99–102 new religious movement charities, 94–102 non-discrimination, 141–3 public benefit standard, 36, 40–1 right to education and, 156–7 Scientology, 55, 94, 95–6, 97–8, 100–1, 129, 142, 148–9 worship, 99, 100–2, 142 removal appeals See appeals applications, 10 Commission decisions, 121–4 controversial charities See controversial charities governing instruments and, 114 grounds See removal grounds powers See removal powers property and, 112–13 public representations, 201–2 rarity, 1–2 statistics, 121 removal grounds applying general principles, 49 ceasing to exist See ceasing to exist failure as undertaking, 17 failure to carry out charitable activities, 51, 83–4 fee-charging schools, 90–3 governance problems and, 84 law reform suggestions, 194–9 legislative provisions, 8–10, 45 new religious movement charities, 94–102 no longer considered charities, 9, 45–50 loss of charitable status See loss of charitable status mistaken registrations See mistaken registrations not operating See not operating public benefit test See public benefit state-connected charities, 86–9 removal powers ambiguities, 133 216 clarification, 2, 13, 85, 89, 114, 125, 170, 200 Commission guidance, 50 grounds See removal grounds human rights See human rights law reform suggestions, 194–9 access to justice, 200–2 clarification, 200 further restrictions, 198–9 greater powers, 196–7 legality, 200 no power, 195 protection of property, 197, 199 legality issue, 2, 46–50, 85, 89, 93, 102, 109, 199, 200 legislative provisions, 8–10, 45 limited powers, 1–2, 50, 84, 85, 89, 93, 102, 114, 125, 170, 194–5 review of judicial decisions, 48–9 significance, 4–7 representations, 171, 201–2 res judicata, 48, 172, 174–5 research, 14, 33 residuary legacies, 19 reverter provisions, 21, 76, 78 right to education limits, 157 non-discrimination, 155–6 overview, 152–3, 157 parents’ religious and philosophical convictions, 156–7 Royal Masonic Hospital Association, 119, 123 Royal Sign Manual, 17 rule of law, 47–9 R.W Bailey Memorial Trust, 122 Santow, G F K., 163 schemes of administration, 116, 118–19 School Fee Planning Charities, 134–5, 181 schools Commission guidance, 91 fee-charging schools, 89–93, 152, 153–5 fee controversy, 89 grammar schools, 152–3 removal grounds, 90–3 Index Scotland, 197 Scott Baden Commonwealth, 53 separation of powers, 164 severance, 23, 25 Shakespeare, William, 33 sham charities, 9, 31, 54–6 Shaw, George Bernard, 32–3, Signpost Phab, 122, social change loss of charitable status, 62–5, 72–3 mistaken registrations, 62–5 precedents and, 62–5 special educational needs, 92 special trusts, 69, 83 sport charities, 65–7, 167–8 Standard Information Return, 197 state-connected charities controversial charities, 85–9 grounds of controversy, 86 statistics, charities, 4–5 Strategy Unit 2002 Report, 10 cy-pres schemes, 109 fee-charging schools, 90, 154 public benefit test, 54, 95, 181 Sulis Trust, 123 tax reliefs fee-charging schools, 89, 157 freedom of thought and religion and, 145, 150 loss of charitable status, 52 mistaken registrations, 69, 139 proper application, property rights and, 138 value, terrorist funding, 118 think tanks, 157, 160–2, 165 time, date of loss of charitable status, 52, 70–1 time charities, 21, 76, 78 Tower Hill Community Trust, 122 Tracheotomy Patients Aid Fund, 117–18 trust deeds, 18, 19, 77 trustees appointment, 115, 116–17, 177, 185 directions to, 116 removal, 116, 119–20 suspension, 115 trusts See also charitable trusts breach of trust, 27, 32 creation, 15 definition, 15–16 trusts of land, 15 ultra vires acts, 26–7, 47, 184–5 undertakings, 16–17 unincorporated associations ceasing to exist, 80 loss of charitable status, 112 viability, 12, 14–18, 42, 196 vivisection, 23, 38, 57, 72–3 Wade, H W R., 192 Wednesbury unreasonableness, 184–5 Williams, Ian, 98–9 wills conditional gifts, 19, 42 residuary gifts, 19 winding up, 81, 120 Yes! Positive Thinking Foundation, 122 217