UK Charities Case Updates

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In March, a decision was handed down by the First-tier Tribunal (Charity) in the case of Shirland v Charity Commission for England and Wales.
UK Corporate/Commercial Law
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Shirland v Charity Commission - consent under section 198 of the Charites Act 2011

In March, a decision was handed down by the First-tier Tribunal (Charity) in the case of Shirland v Charity Commission for England and Wales. This case concerned an appeal by Andrea Shirland against a Charity Commission decision to allow Whitely Homes Trust ('WHT') to amend the objects clause in their Articles of Association pursuant to s198 of the Charities Act 2011. The change amounted to a regulated alteration which requires the prior consent of the Charity Commission.

The change in question was to replace the wording "homes appropriate to their needs" with the wording "Charitable social housing including but not limited to Alms-house Accommodation. This case is of interest because it is the first time that the Tribunal had considered an appeal against the Commission use of its s198 powers.

The reason for the change was for WHT to be able to access funding from Homes England.

The Commission had previously published operational guidance (OG518) which sets out a three-stage test, all three of which must be satisfied before the Commission will approve a proposed regulated alteration. The test is as follows:

  1. are the proposed new Objects exclusively charitable?
  2. is the request of the trustees of the charity for a s.198 consent rational in its circumstances?
  3. do the proposed new Objects undermine or work against the previous Objects of the charity?

The Tribunal found this test to be appropriate and reasonable and, furthermore, agreed with the Commission that WHT's proposed change left the underlying purposes of the charity unchanged and only changed the means by which the objects could be delivered.

It is worth noting that the Tribunal looked very favourably upon the fact that WHT had provided the appellant with the opportunity to attend a consultation event prior to the change and had also sent a letter explaining precisely what the change was intended to achieve. It was by reference to this letter that the Tribunal found the beneficiaries of WHT would only benefit from the change.

Fundamental Freedom Limited

Fundamental Freedom Limited is a company limited by guarantee which tried to register as a Charitable Incorporated Organisation with objects to promote human rights as set out in the Universal Declaration of Human Rights and European and UN declarations, in essentially the same form as the Charity Commission's sample objects for promoting human rights.

However, the Commission refused to register it as a charity due to it not being for exclusively charitable purposes under section 208 of the Charities Act 2011.

Fundamental Freedom appealed this decision to the First-tier Tribunal (Charity) whose role was not to review the decision of the Commission but, rather, make the decision afresh.

The Commission had taken into account Fundamental Freedom's strategic plan documents, a judicial review project proposal and the contents of its website. Therefore, one of the principal arguments was around whether the Commission was correct in allowing extrinsic evidence to be used as part of its decision-making process.

Fundamental Freedom claimed that this extrinsic evidence could only be used if there was ambiguity surrounding the objects themselves and, as the objects were the Commission's own sample objects, there was no need for extrinsic evidence. The Commission argued that if they did not allow extrinsic evidence, then Fundamental Freedom could simply avoid scrutiny.

The Tribunal had to consider three main questions:

  1. What are the particular purposes of Fundamental Freedom?
  2. Are those purposes exclusively charitable in accordance with section 3 of the Charities Act 2011?
  3. Are those purposes for the public benefit in accordance with section 4 of the 2011 Act?

Overall, the Tribunal found that the purpose of Fundamental Freedom was "to undertake legal litigation in pursuit of a political objective" and therefore "registration as a charity was not the appropriate route to pursue that purpose."

Furthermore, their proposed class of beneficiaries, being those who were involved in the Government's covid inquiry, was not wide enough.

One important point from the decision is that the Tribunal agreed with the Commission that, where there is doubt about how a proposed charity would pursue its objects and whether this would be charitable, then the admission of extrinsic evidence is appropriate.

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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