It would seem that the gift made is to a wide enough audience, as it relates to the people of the parish.
Charity Commissioners have said that “substantial public benefit raised a prima facie assumption of charitability”. Judicial cases have always held that the provision of amenities of sports is charitable – open to the public or inhabitants of a locality.
Re: Hadden (1932)
It is necessary to have all charities registered with the Charity Commissioners, bar exempt charities. S.3 allows the commissioners to keep the register of every charity which is not excluded and appropriate information as they see fit.
2. The Parish Council would be able to transfer the property to the Local Authority various ways. They could do this in various ways under the following Acts.
S.3 Open Spaces Act 1906 allows the transfer of property to a local authority if it is to be held on trust for the purposes of public recreation, however consent must be sought from the Charity Commissioners.
s.79 (1) allows the transfer of property (this excludes property connected with an ecclesiastical charity) held for the benefit of inhabitants of a parish from charity trustees to the parish or community council. However if the property is transferred in this way then the council must hold the trust in the same way as the previous trustees did.
Indeed S.139 Local Government Act 1972 allows a local authority to hold the land on trust for the inhabitants of a community.
The trustee’s would have various issues to address whether they can dispose of the land before any transfer would take place.
- Do they have a power to dispose of the land
The trustee’s would have a power of sale under S.6 (1) TOLATA, which gives right of absolute ownership, if no effect is given expressly in the trust instrument. It would also require the consent of the commissioners and any proceeds from any sale would have to be used for the purchase of a similar purpose.
- Is the disposal beneficial to the charity
Any disposal must be in the interests of the charity and its beneficiaries. If land has been sold then it is to be replaced with like land suitable for the purpose which it was intended.
Is it unlikely that consent or an order is required, as the charity is seeking to replace the land with land of a similar nature. This is part of an exception granted by the Charity Commissioners; otherwise an order would need to be granted.
- Are the terms of the disposal the best that can be obtained
The charity must be satisfied that by entering into a contractual agreement with the local council that they are acting in the best interests of the charity and do all that is required of them in their power of acting as trustees. The Trustee Act 2000 gives trustee’s wide power with regards to acting on the charities behalf. The Trustee’s are under an obligation to enhance the income of the land and compare the land which it will inherit.
- Is the Charity Commissioners consent required
As a rule, there would be no need for consent from the commissioners unless:
- Transfer of the land under S.3 Open Spaces Act 1906
- The charity was with a connected person
-
Trustee’s did not use a surveyor or the surveyor would not sanction the transaction
- If the surveyor was not qualified
Consent would be needed if it didn’t comply with the four requirements in S.36. Trustee’s must obtain a report from a qualified surveyor, advertise the property (unless it was not in the best interests of the property), ensure that the disposal is the best that can be obtained and that no connected persons are involved.
Trustee’s would also need to take on board other various points held under S.36(6) –(8) of the Charities Act 1993 as they hold land for a specific purpose. They would normally need to give public notice, but as they are to receive land of a similar quality then this is not required as the “trustees are intending to acquire other land to be held on the same trusts by way of replacement for the land being disposed of” S.36(7) affirms the above that it is not necessary to obtain public notice if acquiring land of a similar size and purpose. S.36(8) also states that the Charity Commissioners may also direct that subsection 6 does not apply to dispositions of land held by or in trust for a charity or class of charities, or (b) that the subsection does not apply to a particular disposition of land held for a charity.
3. If the council can sell the surplus land to a nearby company then it is the duty of the trustee’s to have the doctrine of cy pres applied. This is because there would be subsequent failure on the trust and S.13(1)(d) would apply.
It has been held in Re: King that if a gift is made, but a surplus remains then the doctrine of cy pres should apply. There is no requirement however to show a charitable intent or an ‘out and out’ gift to charity, as this would have been shown when the charity was initially set up.
It has been held that surplus funds left over after a sale of land must be invested into a similar cause or back into the charity. If unable to invest the monies back into the land, then it would held be held on resulting trust and go back to the deceased estate.
It is not necessary to obtain an order from the Charity Commissioners as they are under an obligation to obtain the best price and “where the land sold was used to produce an investment income in which case the proceeds can normally be used to purchase investments designed to generate income”. They must also be satisfied that to build a centre is most beneficial to the charity and would not create hostilities within a class of the community and or the beneficiaries themselves.
It would be possible to set up centre for the elderly under the Recreational Charities Act 1958, in which it allows facilities to be available for the elderly members of the community, providing it is in the interests of social welfare but the proceeds must be used to put back into the charity and enhance its income and investment for the inhabitants of the community.
Bibliography
Modern Equity Hanbury & Martin 16th Edition
Textbook on Trusts Todd 5th Edition
Essential Trusts Iwobi
Tax Journal
www.charity-commissioners.gov.uk
www.butterworths.co.uk
www.hmso.gov.uk/legislation
Statutes
Charitable Uses Act 1601
Open Spaces Act 1906
Recreational Charities Act 1958
Local Government Act 1972
Charities Act 1993
Trust of Land and Administration of Trusts Act 1996
Trustee Act 2000
Local charity means, in relation to any area, a charity established for the purposes which are by their nature or by the trusts of the charity directed wholly or mainly to the benefit of that area or part of it.
Morice v Bishop of Durham (1892) 10 Ves. 522
cf. Recreational Charities Act 1958 and IRC McMullen (1979) 1 WLR 130
Re: Hadden (1932) Ch 133 – A gift to establish recreation grounds for the public was held to be valid.
Verge v Somerville (1924) AC 496
Williams v IRC (1947) AC 447
Charity Commissioners Report 1983
cf. Guild v IRC (1992) 2 AC 310 – where the facilities where reserved for certain members of the community was held to be excluding the public as a group.
S.3 Charities Act 1993 (exempt charities held in Sch.2 of the act)
S.3 (3) (a) & (b) Charities Act 1993
S.79(1) “…and the council or their appointees shall hold the property on the same trusts and subject to the same conditions as the trustees did”.
Trusts of Land and Appt of Trustee’s Act 1996 – “…the trustee’s of land have in relation to the land subject to the trust all powers of an absolute owner”.
Charity Commissioners Website
Charity Commissioners Website
Subsection (6) S.36 CA1993
Charity Commissioners Website – Guidance on Disposal of Land
S.13 (5) Charities Act 1993
“where the original purposes were laid down by reference to an area which then was but has since ceased to be a unit for some other purpose, or by reference to a class of persons or to an area which has for any reason since ceased to be suitable, regard being had to the spirit of the gift, or to be practical in administering the gift”
Re:Randell (1888) 39 Ch.D 213
Re: Slevin (1891); Re: Workingham Fire Brigade Trusts (1956) Ch 622
Charity Commissioners Website