Memorandum from Hilary Phillips, Solicitor
(DCH 22)
COMMENTS ON
DRAFT BILL
Clauses 1, 2 & 3
Jurisdiction
Clause 1 (a) defines "charity" as
a trust or body established for charitable purposes only and Clause
2 (1) states that the charitable purpose must fall within ss(2)(a)
and (b) be for the public benefit. Clause 3(3) removes presumption
of public benefit.
Under the present law—see AG v
Earl of Lonsdale (1827) 1 Sim155 confirmed in The Abbey
Malvern Wells Ltd v Ministry of Local Govt. & Planning
[1951] Ch 728—in view of the Statute of Elizabeth all
schools of learning are to be considered charities.
All charitable purposes acknowledged by the
Statute of Elizabeth are charities and public benefit is inherent
in that.
This means that immediate gifts for charitable
purposes are not rendered invalid by the fact that the particular
purpose cannot take effect. They can be schemed by the Court or
the Commissioners.
Under the proposed law these gifts for what
are now charitable purposes simpliciter, if they do not have activities
detailed which can be construed as for the public benefit will
not be charities subject to the control of the High Court.
There should be something in the legislation,
which confirms jurisdiction, or may not these gifts be lost to
charity?
Public benefit
It seems that the conception of what will make
schools and hospitals for the public benefit has been based on
present political mores.
When I was in DES, during the period of "comprehensivisation",
what is proposed now (the opening of independent schools to more
children from the state sector) would have been an anathema to
a strong section of leftist political opinion.
It was believed that state schools would be
improved by the closure of independent schools and the children
from those schools entering state schools. There was to be no
"creaming off" to the independent sector. Witness the
LCC's refusal to inform London schoolchildren of places at Christ
Hospital.
If the Charity Commission is to take a view
on whether public benefit exists based on political opinion held
from time to time then like other Departments which carry out
the will of Governments, it should have a Minister in the House
of Commons.
Clause 6
It should be made clear that where a majority
of trustees is appealing the Commissioners' decisions their legal
costs can be met from the funds of the charity if it is in being.
Clause 18
Allowing the Commission discretion as to when
schemes and orders are published does not accord with the premise
of "Open Government".
Clause 20
The extending of the power to give advice on
the performance of his duties as such to officers, agents (and
particularly) to employees puts the Commission in the position
of interpreting contracts between the trustees and these individuals
and will cause dissension in the Trust. The Commission comes very
close to acting in the administration of the charity. At the very
least the trustees should be kept informed and sent a copy of
any opinion. It is to be hoped that if a request from employees
comes to the Commission in the first place they try to "build
bridges" rather than cement differences.
Clause 26 and the CIO
If a CIO it to be a corporate body with limited
liability then this should be made clear on the writing paper
and all publications of it. Creditors should be able to know what
they are dealing with from the outset.
The "wrongful trading" provisions
of company law should be imported. It will not serve the reputation
of charities if there is no protection of those who deal with
them.
If a CIO has no limited liability then this
should be made clear. Many lawyers I have spoken to are unsure
of its status after reading the Bill.
Clause 28(4)(a)
This is too heavy a penalty. As it is, many
people are hesitant to become trustees as so many of their shortcomings
could be the subject of swingeing fines.
At least (5) should extend a defence to those
who unwittingly put themselves in this position.
June 2004
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