DCH 22 Hilary Phillips
Joint Committee on the Draft Charities
Bill
From : Hilary Phillips, Solicitor. Fellow of Society
for Advanced Legal Studies.
Co-author of A-Z Charity Law Key Questions answered
and articles on charity law.
Joined DES (as it then was) 1970 ; transferred to
Charity Commission in 1973 and left in 1994 with John Claricoat
and practising with him now as Claricoat Phillips specialising
in charity law.
Comments on draft Bill
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 Sim.155 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.
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.
Allowing the Commission discretion as to when schemes
and orders are published
does not accord with the premise of "Open Government"
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
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.
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.
Hilary Phillips
09.06.04
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