Case Notes: Western Europe

The Court of Appeal has reversed the decision of the High Court in the Church Schools Foundation (CSF) case (see IJNL Volume 3 Issue 2, 2001). The court held that it was not possible to identify the supply for which the grants received by the charity were alleged to be consideration liable to Value Added Tax. Although CSF had improved the properties leased to the affiliated charity, the Church Schools Company (CSC), which had made the grants concerned, CSF also owned the properties and therefore no benefit was received by CSC; its use of the properties derived not from the grants but from the leases, which CSF had granted to it at a market rent.

Elizabeth Hunter, Martin Ward, Hilary Callin v. Leonard Cheshire Foundation [2001] EWHC Admin 48, High Court

The claimants challenged a decision by a charity, the Leonard Cheshire Foundation (LCF), to close the care home in which the claimants had lived for over 17 years and to move them to alternative accommodation in smaller units in the surrounding area. The claimants argued that LCF exercised functions of a public nature so as to be a “public authority” within section 6 Human Rights Act 1998 and therefore owed the claimants a duty to comply with their right to respect for their home under Article 6 European Convention of Human Rights (ECHR), and that the decision to close the home was a breach of that duty in going against their legitimate expectation that it would be their home for the rest of their lives. The court held that:

prior to the introduction of the Human Rights Act 1998, it was settled law that the decisions of a body such as LCF were not subject to judicial review;
nothing in the 1998 Act had altered the status of bodies such as LCF;
therefore, LCF did not exercise a public function and was not subject to the duty imposed by the 1998 Act.

R v. Dyke and Munro [2001] EWCA Crim 2184, Court of Appeal

The two appellants in this case appealed against their conviction and sentence to imprisonment for theft following a trial in the Crown Court. In 1997 the second appellant became a trustee of a charity that raised money for people with leukaemia by street collections, and in 1998 the first appellant was appointed a trustee. The prosecution alleged that a significant part of the money collected had not been paid into the charity’s bank account, and had been taken by the two appellants and a third man. The defence claimed that the appellants were incompetent but not dishonest and had not taken the money. In the Crown Court the judge had directed the jury that they did not need to establish who owned the money, it being sufficient in a case of theft to show that the property did not belong to those who were alleged to have taken it. On appeal, the Court of Appeal quashed the conviction on the grounds that, once money was placed in a collection box it belonged to the charity and any misappropriation of the funds was a theft from the charity and not from the donors, and since no application to amend the indictment had been made it was not possible for the court to substitute a conviction for an alternative offence.

Premji Devraj Varsani v. Jesani, High Court, LTL 13 September 2001 (unreported elsewhere)

Following a decision of the Court of Appeal (see Premji Devraj Varsani v. Jesani (1998) 2 WLR 255) to this effect, an application was made to the court under section 13 Charities Act 1993 for a cy pres scheme for the division of the assets of a Hindu religious charity whose members had divided into two groups after a rift on theological grounds. The High Court held that:

where the assets of a religious charity fell to be divided in these circumstances it would be quite wrong for the court to attempt a qualitative distinction between the two groups and therefore the court must assume an agnostic role;

the duty of the court was to divide the assets so as to facilitate the effective carrying out of the two new charitable purposes, thus safeguarding the religious practices and beliefs of both groups, and subject to the limitations imposed by the scale of the assets concerned and the need to strike a fair balance between the two groups;

in striking that balance the emphasis should be on what each group needed in order to continue to practice its faith rather than the contribution by each group in the past to the assets of the charity;

although need was the major factor in determining the appropriate division of assets, the court must exercise its jurisdiction in such a way as to minimise the hurt and offence to each party, respect their dignity and integrity, and minimize the risk of further conflict.

The court declined to order a sale of the existing temple or to adjudicate at this stage on the future name of each group, but ordered that the minority group be paid £ 250,000 out of the charity’s assets to fund the establishment of the minority group at a new temple.

War Memorial Hostel Committee of the Presbyterian Church in Ireland v. Commissioner of Valuation for Northern Ireland , Lands Tr (NI), [2001] R.A. 166.

A charity established in Northern Ireland to provide accommodation for young people of the Presbyterian Church owned a hostel, which was used mainly as student accommodation, on which it claimed exemption from rates (a local tax on the ownership and occupation of real property) on the grounds that:

it was a building occupied by a charity and used for the advancement of religion within Article 41 (2) Rates ( Northern Ireland) Order 1977;

it was a building not established for profit whose main purposes were concerned with the advancement of religion and it was used mainly for those purposes; or

it constituted a church hall or similar building occupied by a religious body and used for religious purposes.

On appeal against a decision of the rating commissioner to refuse the claim, the Lands Tribunal held that:

the main purpose of the charity was not the advancement of religion but the provision of accommodation to young Presbyterians;
the use of the hostel did not qualify as wholly or mainly for charitable purposes, since its main use was as student accommodation and the students did not occupy positions within the church and were not required to take part in charitable works relating to the advancement of religion;
the hostel building was not similar to a church hall, given that the main use of its facilities as student accommodation went beyond what would be expected in a church hall.

However, since the activities and facilities provided by the common room to the students were similar to those provided by a church hall, exemption was available for the common room only.

*Paul Bater is Senior Research Associate – International Bureau of Fiscal Documentation. He can be reached at paulbater@eudora.com .

The International Journal
of Not-for-Profit Law

Volume 4, Issue 4, July 2002

A quarterly publication of the International Center for Not-for-Profit Law

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