Charities must be protected from conflicts of interest when drawing up a cy-près scheme – one which is intended to follow the donor’s intentions as near as possible where they cannot be followed precisely. Whether a scheme is appropriate cannot be assessed merely in financial terms.
This issue has been considered by the First-tier Tribunal (General Regulatory Chamber) in Miller and another v The Charity Commission for England and Wales and another CA/2021/0009.
The case concerned the Victoria Hall in Ealing, part of the Ealing Town Hall complex built in the late 19th century by public subscription from local people. By a deed of 6 December 1893, the property was to be held on a charitable trust for the purpose of meetings, entertainments and other activities. The original trustees were the mayor and aldermen of the Borough of Ealing, now represented by the second respondent council.
For many years, the building was treated as part of the council’s corporate property, the existence of the charitable trust having been forgotten. The council entered into a deal with Mastcraft, a property developer, to sell off much of the Town Hall complex, including the Victoria Hall for redevelopment as a luxury hotel. Following local community campaigns, the council recognised that the property was held on the terms of the charitable trust.
Consequently, in order to proceed with the deal, the council required a scheme for the application of the property, cy-près. The Charity Commission made a cy-près scheme in March 2021 whereby Victoria Hall would be leased for 250 years to Surejogi – the company established by Mastcraft to redevelop the Town Hall complex – and underleased to the council for the same period. The charity would receive an upfront premium and income from the community hiring of another part of the complex. Surejogi would receive income from the community hiring of Victoria Hall.
The tribunal was satisfied, on appeal against the scheme, that on the facts the charity was simply not self-sustaining and that it was proper that its property should be applied cy-près. However, the scheme was not appropriate: some of its terms were inadequate because they did not protect the charity’s interests.
The respondents were given 185 days to draw up a new scheme in consultation with the appellants. The new scheme was required to manage any actual or perceived conflict of interest between the charity and the council and to provide for an alternative trustee. The council must also act in the best interests of the charity when finalising terms with Mastcraft.
Louise Clark is a property law consultant and mediator
