UK: Religious Charities update - Winter 2010

Last Updated: 10 January 2011
Article by Sarah Rowley

Welcome to the latest edition of our religious charities update. Our aim is to provide informative updates in an accessible form on legal issues affecting religious charities. In this edition we report on the Equality Act 2010 and focus on how the new Act will affect religious charities.

The article takes a look at the relevant case law and in particular the much talked about Catholic Care (Diocese of Leeds) case.

We are also very pleased to include in this edition a guest article written by Joshua Winfield who was Junior Counsel to the representative defendant in the Russian Orthodox charitable trust dispute case (Dean v Burne). In his article he gives us an invaluable insight into this high profile case.

Finally, we have included a property update regarding the Government's recent consultation relating to the proposed changes to the definition of "Qualified Surveyor" in Section 36(4) of the Charities Act 1993.

We hope that you find the articles informative and useful and if you have any comments on the topics covered please let us know.

Employment law update

Implications of the Equality Act 2010 for religious charities

The implementation of the Equality Act 2010 (the "Act") on 1 October 2010 consolidated previous discrimination legislation into one Act and enshrined additional principles regarding discriminatory behaviour that have developed through case law. The Act addresses discrimination on the grounds of the following 9 "protected characteristics":

  • Age
  • Disability
  • Gender reassignment
  • Marriage and civil partnership
  • Pregnancy and maternity
  • Race
  • Religion or belief
  • Sex
  • Sexual orientation

The Act renders it unlawful to discriminate against an individual on the basis of a protected characteristic, in relation to several areas including employment and the provision of goods and services. The protected characteristics most likely to pose challenges for religious charities are religion or belief, sex and sexual orientation.

Charities can benefit from an exemption which permits them to limit those who benefit from their operation on the grounds of a protected characteristic. However, an individual's human rights are important and therefore any discriminatory infringement must be both justified and proportionate.

As there is no limit on the amount of compensation that can be awarded in discrimination claims brought in the Employment Tribunal, it is essential that religious charities operate in compliance with the Act.

Types of discrimination

Indirect discrimination

Indirect discrimination occurs where a provision, criterion or practice ("PCP") is not intended to treat anyone less favourably but nevertheless has the effect of putting people with a protected characteristic at a disadvantage. An employer can objectively justify the PCP, provided that it is a proportionate means of achieving a legitimate aim.

Association and perception

Prior to the Act, legislation was inconsistent in prohibiting discrimination because of a perceived protected characteristic or because an individual was associated with someone with a protected characteristic. An example of perceptive discrimination would be treating an individual less favourably on the basis that they appear to be homosexual when, in fact, they are heterosexual. Associative discrimination would occur, for example, where an individual is treated less favourably because their spouse, or brother, is Catholic. Associative and perceptive discrimination now apply to all protected characteristics except marriage and civil partnership.

Religion or belief

It is unlawful to discriminate against an individual because of their religion or belief (or indeed their lack of any such belief), unless the treatment can fall within one of the exceptions under the Act. These exceptions include: an occupational requirement having regard to the nature or context of the work; where employment is for the purposes of an organised religion; and for employers with a faith-based ethos. Case law suggests that it can be difficult to justify discrimination on the grounds of this protected characteristic.

For example, in Sheridan v Prospects for People with Learning Disabilities (ET Case no: 2901366/06), the Christian charity Prospects implemented a policy on the basis of its ethos of recruiting only practising Christians for the vast majority of roles and told existing non-Christian employees that they were no longer eligible for promotion. The Tribunal found in favour of the individual, sending a clear message to faith-based organisations regarding blanket policies which discriminate on this protected characteristic.

More recently, a Christian registrar who was dismissed by her local authority employer for gross misconduct for refusing to carry out civil partnership ceremonies on the basis that same sex relationships were against her religious beliefs was unsuccessful in her discrimination claim.

Sex discrimination

The treatment of women within religious organisations has been well publicised, most recently with the Church of England's synod vote regarding the introduction of female bishops this summer. Equal treatment of the sexes is a basic concept of human rights law and differential treatment should only be borne out of necessity on the basis of biological differences. Sexual orientation Under the Act, individuals are afforded protection from discrimination on the grounds of their sexual orientation, whether they are heterosexual, homosexual or bisexual. Religious individuals, organisations and institutions are likely to have difficulty reconciling their beliefs with this protected characteristic, as evidenced by the Catholic Care case set out below. Charities exemption Article 14 of the European Convention on Human Rights ("ECHR") prohibits discrimination "on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status". This is a fundamental principle of human rights law and derogation should only be permitted in exceptional circumstances.

Under the Act, charities are still able to limit the group of people who benefit from their operations to individuals with a protected characteristic provided that to do so would either:

  • Help to tackle disadvantages that particularly affect a group with a protected characteristic; or
  • Be objectively justified as a proportionate means of achieving a legitimate aim. The charity's aim must now be justified by "particularly convincing and weighty reasons".

The Charity Commission has published a decision that highlights the challenge charities will face in order to rely on the exemption. The Commission rejected an application made by Catholic Care (Diocese of Leeds) to amend its objects to limit the provision of its adoption service to prospective parents who were heterosexual. Catholic Care argued that the proposed amendments were necessary because its adoption service received donations from the Catholic Church, without which the adoption service would have to close. In accordance with High Court guidance, the Commission determined that respect for the religious beliefs motivating Catholic Care's application and the public nature of the charity's work did not warrant differential treatment in favour of heterosexual parents under Article 14 of the ECHR. The Commission stated that it is fairly common for charities to have to close down or restructure as a result of the absence of funding, remarking that it is unfortunate but would not justify the proposed discrimination.

Conclusion

For these reasons, religious charities must take great care to ensure they do not act unlawfully in discriminating against individuals with a protected characteristic. Where there is any doubt, they should seek timely advice, as the consequences of getting it wrong can be costly.

Dean v Burne: A missed opportunity

The case of Dean v Burne [2009] EWHC 1250 (Ch) (Blackburne J), which concerned a dispute between two rival groups in the English Russian Orthodox community about the ownership of a Cathedral and adjacent church property in Ennismore Gardens, Kensington, was decided on a narrow point of construction of two trust deeds and so might be said to be of limited application. However, some of the legal and procedural issues that arose do have a wider relevance in the context of religious charity disputes, which represent a sizeable portion of the charity litigation in this jurisdiction.

Background

The history of the matter is long and complicated and set out in detail in Blackburne J's judgment. In summary, the litigation arose as a result of the death of Metropolitan Anthony Bloom in 2003, who had led the London Russian Orthodox community since 1950 with a "reformist approach to matters of worship and governance" (para 53 of Blackburne J's judgment) that differed from that of the rest of the Moscow Patriarchate. The community had been constituted as a "Parish" since the 18th century. In 1962 the Diocese of Sourozh was created, of which Anthony Bloom was made Archbishop. After the collapse of the USSR in 1991, there had been an influx into the community of Russians who, to put it broadly, desired a more "traditional" approach in line with that espoused by Moscow.

As a result of the tensions between the long-standing members of the community and the new arrivals, who derived support from Moscow, Metropolitan Anthony's successor, Bishop Basil of Sergievo, decided in 2006 to move from the Moscow Patriarchate to the Ecumenical Patriarchate of Constantinople and create a new parish and a new diocese. He took many of the long-standing members with him.

The trusts

The assets of the community were held on charitable trusts contained in two deeds, one dated 1944 for the benefit of the Parish and one dated 1979 for the benefit of the Diocese.

The unusual feature of the deeds was that they contained similar powers to decide the destination of the trust assets in the event of upheaval in the community ("the Powers"), which were exercisable "on all...occasions upon which any doubt shall or may arise relating to the continuity of the life of the [Parish/Diocese] and the identity of the body community or congregation which shall be entitled to the benefit of this deed".

In June and July 2007, there were meetings at which the Powers were purportedly exercised in favour of the new parish and diocese. The members who remained with the old parish and diocese applied to court for a declaration that the exercise of the Powers was void because there was no doubt relating to continuity or identity so as to permit their exercise.

The decision

Blackburne J construed the wording of the deeds narrowly, and held (at [102]) that the purpose of the Powers was "to ensure that there is an identifiable 'Parish' i.e., a community of Russian Orthodox Christians which is to be entitled to the benefit of the trust deed". He went on to hold that:

"Provided therefore that such a body continues in being (has continuity of life as a functioning group of Orthodox Christians) and can be identified as such (i.e., is not simply a disparate assortment of Orthodox Christians), the operation of the clause is not triggered.

...

[104] I do not therefore consider that the clause is triggered when there is a difference of approach to matters of religious practice, important though those are, or to matters of conduct in the daily life of the Parish ... or to wider, ecclesiological, issues...

...

[106] it is clear on the evidence that no relevant doubt arose, or showed any sign of arising, in May 2006 which is the critical time to consider."

I would respectfully suggest that Blackburne J's reading of the Powers was too narrow. Their purpose was clearly to decide who should own the church property if a split occurred, and a case like this, where a large section of the community, including the Bishop, had broken away for the reasons in para [104] of the judgment, is what the draftsmen would have had in mind. Further, the decision does not sit well with the case of Free Church of Scotland v Overtoun [1904] AC 515, HL (Sc), which was referred to in argument but not cited in the judgment. Lord Halsbury LC held at 612-3 that:

"Speaking generally, one would say that the identity of a religious community described as a Church must consist in the unity of its doctrines. Its creeds, confessions, formularies, tests, and so forth are apparently intended to ensure the unity of the faith which its adherents profess, and certainly among all Christian Churches the essential idea of a creed or confession of faith appears to be the public acknowledgment of such and such religious views as the bond of union which binds them together as one Christian community".

In light of this, the correct approach must have been for the court to decide whether there had been a significant change to the original parish and diocese in respect of the matters set out by Lord Halsbury LC between the date of the deeds and the date of the purported exercise of the Powers. If Blackburne J had done this, it is likely that he would have upheld the exercise of the Powers.

Other matters

The decision is also significant in that it confirms the courts' narrow construction of s.33(4) of the Charities Act 1993, which allows "charity proceedings" (as defined in s.33(8)) to be brought without permission from the Commission or leave of the court in a "pending cause or matter". The Defendants counterclaimed, without permission, for a cyprès scheme in the event that the exercise of the Powers was held to be void, on the basis that there had been a schism and the assets of the original community should be divided between the two successors. Blackburne J, holding that the counterclaim could not be brought, stated (at [123]) that:

"even if there are existing charity proceedings on foot relating to a charity other than an exempt charity, a person who wishes to claim relief in those proceedings, whether as an addition to claims he is already making or by way of counterclaim, requires authorisation under section 33(2) or section 33(5) unless the relief sought is clearly within the scope of any authorisation already given."

I consider that this interpretation renders s.33(4) nugatory, in that if the additional relief falls within the authorisation already given, then it has passed through the "statutory filter". It is difficult on this basis to see what would fall within the definition of "taking proceedings in a pending cause or matter".

Conclusion

Dean v Burne is an unsatisfactory decision for several reasons and represents a missed opportunity, both to resolve the underlying dispute between the parties and to develop the law relating to religious charity disputes in light of Free Church of Scotland v Overtoun and Varsani v Jesani [1999] Ch 219, CA.

Property law update

The definition of "qualified surveyor"

The Government entered into a consultation period which closed on 7 June 2010 regarding the definition of "Qualified Surveyor" in Section 36(4) of the Charities Act 1993. The Consultation considered two options:

  • extend the Section 36 (4) definition to include Fellows of the National Association of Estate Agents (NAEA); or
  • leave the current definition unchanged.

The current definition states that the person is a qualified surveyor if: they are a fellow or professional associate of the Royal Institution of Chartered Surveyors or of the Incorporated Society of Valuers and Auctioneers or satisfy such other requirements as may be prescribed by regulations made by the Minister; and they are reasonably believed by the charity trustees to have ability in, and experience of, the valuation of land of the particular kind, and in the particular area, in question.

The jury was out as to whether the consultees would agree with the Government's perceived benefits of changing the definition, which were:

  • widening the meaning of qualified surveyor and allowing trustees to access a broader pool of professional expertise; and
  • consequently make it quicker, easier and often less expensive for trustees to get the information they need.

The response to the Consultation was published in September and confirmed that the Government will:

  • support the proposals to extend the definition of "qualified surveyor" but to do this as part of any changes following its review of the operation of the Charities Act 2006, in 2011.
  • consider the regulation of sales and disposals as part of the 2011 review (on the basis that charities in England and Wales make thousands of sales and other disposals of interest in land each year).

Consequently the results of the Consultation (which includes responses from interested professional bodies and organisations) will inform the broader review as wider issues were raised by the respondents to this Consultation. The aim is to take changes forward in a way that is cohesive rather than piecemeal. So for now, there is no immediate change which charities need to be aware of and hence no action is required.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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