DCH 297 Hubert Picarda QC
DRAFT CHARITIES BILL: EVIDENCE OF HUBERT PICARDA
QC
Background
Author of Picarda Law and Practice Relating to
Charities (3rd edn 1999, 4th edn commissioned
and in preparation) 848 pp. President of Charity Law Association
(1992-2004). Managing Editor Charity Law and Practice Review 1992-
2002. Specialist charity practitioner.
Recited Government aims :agenda
Strategy Unit Report Private Action Public Benefit:
" to maintain their charitable status independent schools
which charge high fees have to make significant provision for
those who cannot pay full fees and the majority probably do so
already." (emphasis added)
Fiona Mactaggart ( Charities Minister) "The
Bill will force charities including private schools such as Eton
to demonstrate public benefit and would face for the first time
a public character test carried out by a beefed up Charity Commission
(emphasis added)
Stuart Etherington (NCVO) " If the Charity
Commission is saying it's unable to carry out a public character
test to existing charities then that is quite a serious issue
The draft legislation would have to be amended if this was the
case, otherwise there would be no point in having the bill"
The common law of charities
1. A contemporary definition There are four
heads of charities listed by the House of Lords in Pemsel's case
(the fourth head being subdivided by textbook writers into subcategories).
Far from being "archaic" (as untutored critics have
zealously suggested), the case law and the analogising technique
has developed a contemporary flexible evolutionary definition
accepted throughout the common law world. Australia has just scrapped
its new Charities Bill leaving its common law definition in place.
Significantly, apart from highlighting altruism as a constituent
of public benefit, none of the Commonwealth reviews has gone down
the path of constructing a policy driven and politically controversial
redefinition of public benefit.
2. Schooling and learning The advancement
of education through the medium of schools universities and medical
and law schools has always been treated as self evidently charitable.
This was not a case of some artificial presumption but of common
sense. "Education, education, education", learning,
literacy, numeracy, and like skills altruistically taught in schools
and colleges as preparation of the young for the work of life
have been respected for centuries as having the necessary element
of public benefit or, as was said by the Court of Appeal in relation
to a law school ( see Smith v Kerr [1902] 1 Ch 774,affirming
the decision in the court below) as having the necessary "public
character" to be a charitable object.
3. Public benefit may be direct or indirect
4. There are variations in the standard of public
benefit within each of the heads of charity reflecting the differing
aims of for example religion and education and the courts have
not sought to harmonise or make logically consistent the degree
of public benefit in each case. You cannot "logically"
harmonise unlikes .
"Private" schools: a "thorn in the
side of the law"
5. The position of fee paying schools, not run for
profit has been misdescribed as an anomaly (a "thorn in the
side of the law" as one recent hyperbolist put it). The Tenth
Report of the House of Commons Expenditure Committee(1975) recommended
that all charities including those charities formerly admitted
under the heading of education should continue to qualify only
if they met a statutory " overriding criterion" of "purposes
beneficial to the community". The better informed Goodman
Report (1976) scotched this by recommending the continuation of
charitable status of the independent schools because of the very
considerable and beneficial contribution in the field of education.
The TUC and Labour party document A Plan for Private Schools
(1981) recommended the ending of charitable status for independent
schools other than those for the handicapped and the ending of
the assisted places scheme. The NCVO initiative of 1998 did not
canvass the views of independent schools but. the agenda now in
the Bill incorporates the dodge (as Professor David Daube was
wont to describe legal artifices) of reversing any relevant "presumption"
and giving public character a new meaning as a test licensed by
the recently devised "social and economic impact" objective.
The new statutory requirement of demonstrating public benefit
is to override any previously accepted and acceptable indirect
benefit which was compared derisively to a "trump card"
whose trumping quality should be removed or diluted by the ingenious
"presumption reversal" dodge and a newly blessed but
unenacted public character test.
Public benefit
6. Charities are not "equal" animals. And
a new definition of overriding criterion of benefit to the community,
social value or the like goes counter to the common law and was
not needed. The evidence of such a need, significantly undiscovered
in any other jurisdiction, is slim unparticularised and implausible.
7. The definition of public benefit can no doubt
for the future be statutorily reversed or negatived and replaced
but such a fundamental legislative step requires measured legal
consideration. Such consideration is incompatible with the haste
enjoined by the NCVO.
8. Demonstration of public benefit in the case of
education within the formal structure of schools and colleges
not run for profit is not required according to the common law
since it is self evident . The undoctrinaire common law accepts
that the benefit element in public benefit can be a direct or
an indirect benefit. If demonstration or proof of the provision
of public benefit is intended to be replaced the common law decisions
on this area (schools having a public character) as a matter of
law it would require a new explicit definition which overrides
the common law decisions affecting existing charities and would-be
charities falling within the governing decisions.
9.Mere reversal of the "presumption" of
public benefit cannot change the declared law on this point. Public
benefit has a consistent meaning throughout the Commonwealth and
is not synonymous with the malleable word "public interest"
"social value" or a benefit having the necessary "social
and economic impact" fulfilling "social justice".
Public character test
10.The term "public character", as tentatively
proposed by the Charity Commission, is no more than a recently
assembled patchwork criterion for which there is no precedent
or rationale in the cases (cf Smith v Kerr referred to
in paragraph 2 above). The special meaning given to public character
by the Strategy Unit is about as relevant as the famous and diverting
definition attributed to the word 'glory' ("a fine knock
down argument"). Fees high or low in relation to schooling
and university education ("serving to exclude" as it
is tendentiously and innovatingly put) were, in the common law,
never either a badge of public character or a mark of Cain signifying
a denial of public character.
11.To leave the Commissioners in charge of administering
a novel generalised public character test would run counter to
well established principle (see paragraph 2 above) at any rate
in relation to registered and registrable independent schools
and educational institutions.
Constitution of the Charity Commission : Law, policy
and the judiciary and the charity sector
12. By identifying social and economic impact as
an objective of the Commission the legislature appears
to be providing that a "beefed up" Charity Commission
is to be an instrument of policy. Until now the Commission has
been applying relatively simple legal criteria and factual analysis,
promoting effective use of charitable resources by encouraging
better methods of administration, giving information and advice,
investigating and checking abuses, and by so acting as best to
promote and make effective the work of the charity in meeting
the needs designated by the trusts of the charity and not by some
outside political criteria.
13. The objective of "social and economic impact"
as a golden met-wand, whether of public character or of the appropriateness
of new cypres scheme objects, imports vague factors falling within
the fields of government policy. Judges remain involved in the
construction of wills and governing documents of charities. They
too will be confronted by, and embrangled in, the introduction
of social policy decisions of the Commission effectuating Government
policy. Such decisions are likely to engage judges in an unenviable
quasi-executive task. The objective should be jettisoned.
14. Enforced contributions by independent sector
to state sector The advancement of of literacy has escaped
the attention of ad hoc caucuses (or "focus groups")
and "coalitions" advocating reform of public benefit.
Increasing deplorable illiteracy and plummeting academic standards
in the ailing state sector should not through the engine of charity
law and re-definition enable a stealth tax to replace the abandoned
assisted places scheme, in the form of enforced levies and compulsory
contributions from the independent sector. This seems to be envisaged
by some of the hostile questions raised by certain members of
the Joint Parliamentary Committee and read by me on the internet.
My concern as a charity lawyer is for the integrity of charity
law.
15. Debasement of jurisprudence and the common
law by policy Neither judges nor the Charity Commission should
be called on to grapple with this slippery fudged new test with
its tendentious invocation of a "serving to exclude"
criterion.
Benefits and costs of the Bill
16.The cost to the charity sector is not analysed
by the Bill or the Strategy Unit Report. Red tape, increased bureaucracy,
interventionism and prolonged costly arguments, of which I have
long experience, about unclear tests (activities tests and new
calls to "demonstrate" public benefit and public character)
are likely to benefit ingenious lawyers rather than advance the
interests of charity.
Hubert Picarda QC
14 July 2004
| 
