The International Journal
of Not-for-Profit Law

Volume 1, Issue 3, March 1999

In a case involving a dispute betwen rival factions of a religious charity, the majority sought to remove the trustees of the charity who were in the minority. The High Court held that the exercise of the court’s jurisdiction to order a scheme for the administration of the charity under section 13 Charities Act 1993 was not limited to cases where the objects of the charity had become impossible or impracticable. The original purpose of the charitable gift had ceased to provide a suitable and effective method of using the property given, and the spirit of the gift supported an order for a scheme dividing the property between the two factions.

Singh v Bhasin, The Times 21 August 1998

In a case where a trustee of a religious charity was sued in a representative capacity by a member of the charity challenging the validity of a resolution of the general meeting of members to suspend his membership for 10 years, the High Court held that a trustee who chose to defend an action against him without first obtaining the protection of an order authorising the payment of his costs out of trust funds proceeded at his own risk. The court will not allow trust funds to be used to pay costs unless it would have authorised the defence of the suit at the charity’s expense.

The Zoological Society of London v Customs & Excise, VAT Tribunal 8 July 1998; Dean & Canons of Windsor v Customs & Excise, VAT Tribunal 7 September 1998

The 6th EC Council Directive on VAT, Directive 77/388, permits member states to impose conditions on the exemption from VAT of cultural services provided by non-public bodies. Two recent tribunal cases concerned the liability to VAT of admission charges imposed by a zoo and a chapel. The tribunal in the second case accepted that the chapel’s features were similar to those of a museum for this purpose. The critical issue in each case was whether the charity was managed and administered on an essentially voluntary basis. So far as the zoo was concerned, the tribunal accepted that this was true on the basis that the governing body, who exercised effective control over the paid management staff, were not remunerated. In the case of the chapel, the trustees were paid a stipend; the tribunal held that these payments were consideration for their temporal as well as their spiritual duties, so that the trustees could not be said to be acting in an essentially voluntary capacity.

National Trust v Hoare, Court of Appeal, 13 October 1998

A recent case in the Court of Appeal concerned the liabilty to business rates (a tax on the ownership or occupation of real property) of a charity owning a historic building open to the public. Charities are exempt from 80% of their liability to business rates; this case concerned the valuation of the property for the purposes of determining the remaining 20% liability, based on the estimated rent that could be obtained if the property was on the open market. The court rejected the finding of the Lands Tribunal that a valuation based on 3% of the gross receipts from the property was the correct method and held that, where there is no commercial market for the property (which is normally the cae with historic buildings because the costs of maintenance and repair would deter any potential tenant), the Lands Tribunal must consider reducing the assessment to nil.