Home Information Cases Baddeley & Ors v Sparrow, Carne, Websper & Charity Commission For England & Wales (2015)

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Baddeley & Ors v Sparrow, Carne, Websper & Charity Commission For England & Wales (2015)

Summary

The First-tier Tribunal had erred when amending a Charity Commission scheme in respect of land held on trust so as to preserve the land as an open space, by treating the trusts as establishing the land as having a purpose rendered charitable by reason of the particular qualities of the land in question.

Facts

The managing trustees of a charity appealed against a decision of the First-tier Tribunal to amend a Charity Commission scheme in respect of land held by the trust so as to preserve the land as an open space.

The land (the Recreation Ground) had been acquired by the local authority in 1956. The conveyance set out the trusts on which the land was to be held. In 2002, the High Court determined that the trusts were charitable trusts. The trust created by the 1956 conveyance required the land to be used for recreation purposes and preserved as an open space. The local authority, which had been unaware that it held the land as a trustee and not beneficially, had built a leisure centre and car park on the land and had granted a 75-year lease of another part of the land to a rugby club. The Charity Commission scheme was intended to regularise the charity's position by amending its purposes, its administrative powers and its governance arrangements. The respondent local residents appealed against the scheme. The tribunal allowed the appeal and amended the scheme. It concluded that the 1956 conveyance was intended to benefit the public by requiring the local authority to hold the property on trust, for reasons which included the land being maintained as an open space. The trustees sought to reinstate the scheme as propounded by the Commission, with certain changes.

The trustees argued that the tribunal did not have sufficient evidence of the intention of the sellers in the 1956 conveyance to justify an interpretation that the true charitable purpose was to preserve the land as an open space (ground (1)(a)). They further argued that the tribunal had erred in treating the trusts establishing the Recreation Ground as having a purpose rendered charitable "by reason of the particular qualities of the land in question" (ground (1)(b)).

Held

(1) To establish a valid charitable trust to preserve the land, it would need to be shown (a) that the qualities of the Recreation Ground were such that the purpose of preserving it as an open space was capable of being a charitable purpose; and (b) that the 1956 conveyance had created such a trust. It was not clear what the tribunal had concluded on either of those matters. It might be inferred from its decision regarding the objects of the charity prior to the making of the scheme, and its examination of the proper interpretation of those objects, that it considered one of the purposes was to preserve the Recreation Ground as an open space. However, what the tribunal actually addressed was intention rather than purpose. An intention to retain the Recreation Ground as open space did not lead to the conclusion that the original purpose within the meaning of the Charities Act 2011 s.62included retaining the recreation ground in specie, Oldham BC v Attorney General [1993] Ch. 210 considered. The question was whether there was a trust to do so. The only qualities of the Recreation Ground referred to by the tribunal, apart from reference to "some of the most attractive and historic parts of [the city]", were "the location of the land and its status as an area of green space alongside the heart of the historically and culturally important centre of the city". No other factor was identified as a relevant characteristic. In any event, the tribunal did not expressly conclude that the qualities of the Recreation Ground were of themselves the factors giving rise to a charitable purpose. If it were to be taken as having decided otherwise, that was a conclusion that it could not properly have reached on the evidence. There was nothing to suggest that the land's intrinsic nature warranted its preservation. With regard to whether it had been possible at the time of the 1956 conveyance to have created a valid charitable trust for the preservation of the land as an open space, the conveyance did not purport to create such a trust, Oldham applied. Accordingly, the trustees succeeded on ground (1)(b). Regarding ground (1)(a), the subjective intention of the sellers was irrelevant to the issue of construction. The objective intention was determined as part of the process of construction resolved in favour of the trustees (see paras 61-73 of judgment). (2) If, contrary to that view, the 1956 conveyance did create a trust to preserve the Recreation Ground as an open space, it appeared that the lease to the rugby club was granted in breach of trust. If the lease was nonetheless valid, a cy-pres occasion had arisen. It did not matter whether it was s.62(1)(a)(ii) or s.62(2)(e)(iii) of the 2011 Act which applied. A power of sale which did not otherwise exist could not be conferred on the trustees by an administrative scheme. However, it was not known whether there was any prospect of successfully challenging the lease or, if there was, whether it would be a sensible course of action. If there was no possible challenge, a cy-pres scheme would be necessary in relation to that land if the trustees were to have a power of sale or a power to swap land. In contrast, if it were a straightforward matter to set the lease aside, it was not easy to see how a cy-pres occasion would have arisen (paras 74-75).

Appeal allowed

Upper Tier (Tax)
Warren J, Judge Alison McKenna
Judgment date
30 July 2015
References
LTL 26/10/2015