Bayoumi v Women's Total Abstinence Union Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Chadwick,Lord Justice Buxton,Lord Justice Rix |
| Judgment Date | 05 November 2003 |
| Neutral Citation | [2003] EWCA Civ 1548 |
| Docket Number | Case No: 2003/0446 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 November 2003 |
[2003] EWCA Civ 1548
Lord Justice Chadwick
Lord Justice Buxton And
Lord Justice Rix
Case No: 2003/0446
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR SIMON BERRY QC)
Mr Andrew Simmonds QC and Ms Tracey Angus (instructed by Howard Kennedy of Harcourt House, 19 Cavendish Square, London SW1A 2AW) for the Appellant
Mr Michael Furness QC and Mr Jonathan Evans (instructed by Winward Fearon of 35 Bow Street, London WC2 7AU) for the Respondent
This is an appeal from an order made on 21 January 2003 by Mr Simon Berry QC, sitting as a Deputy Judge of the High Court in the Chancery Division, in proceedings brought by Mr Omar Bayoumi against the Women's Total Abstinence Educational Union Limited, a charity, and Mr James Perkins. The appeal raises questions of some general importance in relation to the scope and effect of the restrictions on dispositions of charity land contained in Part V of the Charities Act 1993.
The underlying facts
The Women's Total Abstinence Educational Union Limited (to which I shall refer as "the Charity") is a company limited by guarantee and not having a share capital. It was incorporated in 1951 under the Companies Act 1948 with objects that are exclusively charitable. It is expressly provided, at clause 3 of its memorandum of association, that the Charity shall not sell any property subject to the jurisdiction of the Charity Commissioners which it may from time to time hold "without such authority, approval or consent as may be required by law". Power to manage the business of the Charity is vested in the Committee of Management. Accordingly, the members of the Committee for the time being are the "charity trustees" for the purposes of Part V of the Charities Act 1993 –see section 97(1) of that Act.
At all material times the Charity has been registered at HM Land Registry as the owner of freehold property known as 23 Dawson Place, London W2. By a contract dated 16 November 2001 the Charity agreed to sell that property to Mr Perkins at a price of £3,200,000, of which £200,000 was paid by way of deposit on exchange of contracts and released to the vendor. The date fixed for completion was 18 February 2002. The contract contained the statement, required by section 37(1) of the 1993 Act, that the property was held by the Charity, that the Charity was not an exempt charity, and that the restrictions on disposition imposed by section 36 of the Act applied to the sale. The contract was silent as to compliance with the requirements in section 36(3) of the Act.
The contract contained no prohibition against assignment. On 26 November 2001 Mr Perkins assigned the benefit of the contract to Mr Bayoumi. The consideration for the assignment, paid by Mr Bayoumi to Mr Perkins on 26 November 2001, was £450,000. In addition, Mr Bayoumi reimbursed to Mr Perkins the £200,000 which Mr Perkins had paid to the Charity by way of deposit on exchange of contracts. On 15 January 2002 solicitors acting for Mr Bayoumi gave notice in writing to the solicitor then acting for the Charity that the contract had been assigned to him. The Charity's solicitor took the point, in a letter of 17 January 2002 to Mr Perkins' solicitors, that the Charity could not be required to execute a transfer to the property to his assignee. That point, which appears to have been without any foundation, has not been pursued.
By a letter of 8 February 2002 Mr Bayoumi called upon the Charity to complete. The Charity instructed new solicitors, who took advice from counsel. On 18 February 2002 those solicitors wrote to Mr Perkins' solicitors informing them that they had advised the Charity that the contract into which it had entered on 16 November 2001 was void by reason of a failure to comply with the requirements in section 36 of the 1993 Act. A copy of that letter was passed to Mr Bayoumi's solicitors. They rejected the contentions advanced on behalf of the Charity. These proceedings were commenced by Mr Bayoumi on 24 April 2002 by the issue of a claim form in which the Charity was named as sole defendant.
Sections 36 and 37 of the Charities Act 1993
The material provisions of section 36 of the 1993 Act, in the context of this appeal, are these:
"36 (1) Subject to the following provisions of this section …, no land held by or in trust for a charity shall be sold, leased or otherwise disposed of without an order of the court or of the Commissioners.
(2) Subsection (1) above shall not apply to a disposition of such land if –
(a) the disposition is made to a person who is not -
(i) a connected person …, or
(ii) a trustee for, or a nominee of, a connected person; and
(b) the requirements of subsection ( 3) or (5) below have been complied with in relation to it.
(3) Except where the proposed disposition is the granting of such a lease as is mentioned in subsection (5) below, the charity trustees must, before entering into an agreement for the sale, or (as the case may be) for a lease or other disposition, of the land –
(a) obtain and consider a written report on the proposed disposition from a qualified surveyor instructed by the trustees and acting exclusively for the charity;
(b) advertise the proposed disposition for such period and in such manner as the surveyor has advised in his report (unless he has there advised that it would not be in the best interests of the charity to advertise the proposed disposition); and
(c) decide that they are satisfied, having considered the surveyor's report, that the terms on which the disposition is proposed to be made are the best that can reasonably be obtained for the charity.
(4) …
(5) Where the proposed disposition is the granting of a lease for a term ending not more than seven years after it is granted …, the charity trustees must, before entering into an agreement for the lease –
(a) obtain and consider … advice … ; and
(b) decide that they are satisfied, having considered that … advice, that the terms on which the disposition is proposed to be made are the best that can reasonably be obtained for the charity.
…"
Section 37 of the 1993 Act contains provisions which are supplementary to those in section 36. The following are material in the present context:
"37 (1) Any of the following instruments, namely -
(a) any contract for the sale, or for a lease or other disposition, of land which is held by or in trust for a charity, and
(b) any conveyance, transfer, lease or other instrument effecting a disposition of such land,
shall state –
(i) that the land is held by or in trust for a charity,
(ii) …, and
(iii) … that the land is land to which the restrictions on disposition imposed by [section 36] apply.
(2) Where any land held by or in trust for a charity is sold, leased or otherwise disposed of by a disposition to which subsection ( 1) or (2) of section 36 above applies, the charity trustees shall certify in the instrument by which the disposition is effected –
(a) (where subsection (1) of that section applies) that the disposition has been sanctioned by an order of the court or of the Commissioners (as the case may be), or
(b) (where subsection (2) of that section applies) that the charity trustees have power under the trusts of the charity to effect the disposition, and that they have complied with the provisions of that section so far as applicable to it.
(3) Where subsection (2) above has been complied with in relation to any disposition of land, then in favour of a person who (whether under the disposition or afterwards) acquires an interest in the land for money or money's worth, it shall be conclusively presumed that the facts were as stated in the certificate
(4) Where –
(a) any land held by or in trust for a charity is sold, leased or otherwise disposed of by a disposition to which subsection ( 1) or (2) of section 36 above applies, but
(b) subsection (2) above has not been complied with in relation to the disposition,
then in favour of a person who (whether under the disposition or afterwards) in good faith acquires an interest in the land for money or money's worth, the disposition shall be valid whether or not –
(i) the disposition has been sanctioned by an order of the court or of the Commissioners, or
(ii) the charity trustees have power under the trusts of the charity to effect the disposition and have complied with the provisions of that section so far as applicable to it.
…"
These proceedings
As I have said, these proceedings were commenced by Mr Bayoumi against the Charity as the sole defendant. Mr Bayoumi sued as assignee of the contract of 16 November 2001. The primary relief sought was specific performance of that contract. On 1 July 2002 Mr Bayoumi applied for summary judgment. That application came before Master Moncaster on 23 July 2002. The master refused the claimant's application. But he held that the matter could be dealt with summarily; and he gave judgment in favour of the Charity. He did so on the basis: (i) that none of the requirements of section 36(3) of the 1993 Act had been complied with; (ii) that, accordingly, the Charity could not execute a transfer in which the members of the Committee of Management – as the charity trustees for this purpose —gave the certificate required by section 37(2); (iii) that, in those circumstances no transfer would take effect unless the transferee could rely on the provisions of section 37(4) of the Act; and (iv) that those provisions were not enacted for the benefit of a purchaser who had...
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