First defendant charity failing to obtain order of court or Charity Commissioners before contracting to sell property — Purchaser selling benefit of contract to claimant — Charity seeking to avoid contract — Claimant contending that defect cured by section 37(4) of Charities Act 1993 — Whether section applicable only to completed transactions — Claimant’s submission rejected
The property in dispute was the first defendant charity’s former headquarters in Notting Hill, West London. On 16 November 2001, the second defendant, P, exchanged contracts for the purchase of the property from the charity for £3.2m. Ten days later, P purported to assign the benefit of the contract to the claimant, B, in consideration of a payment of £450,000. The charity refused to complete and, in defence to an action initially brought by B, claimed that the contract was void by reason of its own non-compliance with section 36(1) of the Charities Act 1993. This required that no land belonging to a charity shall be “sold, leased or otherwise disposed of without an order of the court or the Commissioners”. In answer, B and P, relying upon section 37(4) of the Act, contended that such non-compliance had not invalidated the contract because P had acquired, in good faith, an interest in the property for money or money’s worth. The charity submitted that section 37(4) did not apply to contracts but only to completed transactions. That submission was based upon the opening words of subsection (4), which referred to instances where charity land was “sold, leased or otherwise disposed of by a disposition to which subsection (1) or (2) of section 36 above applies”.
Held: The charity’s submission was correct.
Section 37 made a distinction between a contract for a disposition and an effected disposition, and it was natural to read the same distinction into the words in issue.
Jane Evans-Gordon (instructed by Freedman Green) appeared for the claimant; Jonathan Evans (instructed by Winward Fearon) appeared for the first defendant; Tracey Angus (instructed by Howard Kennedy) appeared for the second defendant.
Alan Cooklin, barrister
