Playground complaints
The Charity Tribunal has ruled on what issues it can and can't look at for the hearing of the appeal between Derek Maidment and Lennox Ryan v The Charity Commission
Back in 1903 Charles Newman Kidd gave Dartford Council some land which he set up in charitable trusts as a recreation ground, (the ‘Kidd Legacy’). The council now acts as the charity’s trustee and the land could not be sold under the terms of the trust because it was designated for recreation. However, the council sold a piece of the land to St James’ Investments on 4 June 2004, breaching the trust. The Charity Commission has accepted this was a genuine mistake and the council did not fully understand the implications of the trust deed. Since then, the council has negotiated with the regulator for a scheme to rectify matters. The proceeds of a sale would be used to purchase an area of replacement land within the park and the remaining funds (£270,000) will be held on trust as a permanent endowment. The Commission’s involvement was required because:
- The council is using funds held as charity trustee to purchase land it holds in itscapacity as local authority. As this involves self-dealing, the Commission’s consent is required (under s. 26 Charities Act 1993) or the transaction would be void.
- Only part of the proceeds of sale would be required to purchase the replacement land. The remaining funds will be invested to produce an income for the charity. However, holding part of the charity’s endowment as investments rather than land is a change to the charity’s trusts – the land becomes the charity’s income-producing property and would not be entirely used for its original purposes. This alteration can only be madeby the proposed scheme and even then it can only be made if there are circumstances which would allow the property to be applied cy-près (s.13 Charities Act 1993).
The effect of the scheme was confirmed in the Commission's final internal review although the summary of this on the Commission's website suggests that the purposes of the charity and the terms on which the property was held were not altered by the scheme. The Commission gave public notice of its intention to make the scheme. A large number of representations were received against the proposals and the underlying issue is whether the scheme putting into effect the compensation offered by the local authority adequately compensates the charity for the breach of trust which has arisen.
As well as posing additional issues that the parties didn’t raise, such as whether the scheme could be a mechanism for the management of conflict of interest issues (see para. 4.6 of the ruling), the Charity Tribunal has stated it will decide on the issue outlined in para 4.5 [1].
The focus is all about the significance of the words ‘in perpetuity’ in the deed of gift and whether the council as the trustee has the power to change the land’s use.
‘There is insufficient evidence to comment on the merits of this case although we have some sympathy for the Charity Commission's position. Ultimately, if there was a finding of bad faith, this may result in the land being returned to public use which is presumably what the appellants want to achieve.
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from
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