Hope Community Church (Wymondham) v Nicholas Brendan Phelan
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Falk |
| Judgment Date | 22 May 2020 |
| Neutral Citation | [2020] EWHC 1240 (Ch) |
| Date | 22 May 2020 |
| Docket Number | Case No: BL-2019-001906 |
| Court | Chancery Division |
[2020] EWHC 1240 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Mrs Justice Falk
Case No: BL-2019-001906
Philip Rainey QC (instructed by Hatch Brenner LLP) for the Claimant
Guy Fetherstonhaugh QC and Tricia Hemans (instructed by Birketts LLP) for the Defendants
Hearing date: 5 May 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is a Part 8 claim by Hope Community Church (Wymondham) (the “Church”). It seeks a declaration that it has the right to enfranchise its church premises in Wymondham, Norfolk (the “Premises”), pursuant to s 1 of the Places of Worship (Enfranchisement) Act 1920, as amended (the “1920 Act”).
The one-day hearing of the claim, which I heard remotely, did not involve any live evidence. I would like to thank the parties and their legal representatives for their cooperation in ensuring that the hearing could go ahead within the planned trial window, and Counsel for their clear and helpful submissions.
The relevant facts
The Church is a private company limited by guarantee, incorporated on 6 October 2008. It is also a registered charity. The Defendants are brothers. They act in their capacity as trustees of the Phelan Group Limited Retirement Benefits Scheme, which is the pension fund related to their family business, Phelan Plant Hire (“PPH”).
The Premises had previously been used as a workshop by PPH. The property was first occupied by PPH in 1983, and the freehold was purchased from the council in 1988. The Premises were rented out when the business operations of PPH were moved to Snetterton, and title was transferred to the pension fund in the 1990s. A witness statement from Andrew Phelan describes the Premises as the “bedrock” of the pension fund, and explains that the family have a “strong emotional attachment” to the building. The family does not wish to part with it.
On 18 March 2015 the Church entered into a 30 year lease of the Premises (the “Lease”) from the Defendants.
The prescribed particulars of the Lease at LR5 provide:
“The property demised will, as a result of this lease be held by (or in trust for) Hope Community Church (Wymondham) a non-exempt charity, and the restrictions on disposition imposed by sections 11 to 121 of the Charities 2011 will apply to the land (subject to section 117(3) of that Act).”
(LR5 is required for leases in favour of a charity. It reflects s 122(8) Charities Act 2011, which requires a disposition of land in favour of a charity to state whether the land will be held by or in trust for a charity, whether the charity is exempt and, where it is not, to confirm that the restrictions on disposition imposed by ss 117 to 121 of that Act will apply 1. The reference to s 11 rather than s 117 in the Lease is obviously a slip.)
The permitted use of the Premises, set out in the Lease, is defined as follows:
““Authorised Use” means as a church and community centre with ancillary offices, including as a place of worship, concert hall, indoor/outdoor sports, restaurant/coffee shop, non residential education and training, business use and storage or for any other purpose within Use Classes B1, D1 or D2 subject
to obtaining the prior written consent of the Landlord (such consent not to be unreasonably withheld or delayed);”.
It is not disputed that the Church is a Christian church, that the Premises are and have at all material times been used as a church, and that religious services are open to the public. The Premises are also used as a local community centre, providing outreach activities for local residents.
Paragraph 16.2.2 of Schedule 3 to the Lease is also relevant to the dispute. Schedule 3 sets out the covenants given by the Church as tenant. Paragraph 16 is headed “Alienation”, and relevantly provides:
“16.2 Except to the extent allowed by this paragraph 16 not to:
16.2.1 …
16.2.2 hold the whole or any part of the Premises as trustee or agent or otherwise for the benefit of any other person.”
A witness statement from one of the director/trustees, Mark Bullen, explained that the Church has incurred around £850,000 of expenditure on the Premises, including around £100,000 on a new roof. Mr Bullen also commented on Andrew Phelan's reference to emotional attachment, stating that to him the building was his place of worship, where he expressed his faith, and was the centre of the Church's ministry. He added that the claim was being brought to protect the long-term security of the Church and church community.
The issue in dispute
As already indicated, the parties are in dispute over whether the Church is entitled to exercise the right of enfranchisement under the 1920 Act. In essence, the dispute turns on whether the Defendants are right to maintain that the legislation only applies where the Premises are held on what amounts to a trust in strict legal terms, or whether the Church's status as an incorporated charity is such that it can meet the requirements of the legislation without such a trust. A subsidiary point is that the Defendants maintain that any such trust that did exist, or was now created, would breach paragraph 16.2.2 of Schedule 3 to the Lease, because that prohibits the Premises from being held on trust.
It is fair to say that the 1920 Act is a little encountered piece of legislation, with just one known contested High Court case, Stradling v Higgins [1932] Ch 143. It comprises only six sections.
The undisputed background to the legislation is a Select Committee report on “Town Holdings” dating from 1889 (the “Town Holdings Report”). The relevant recommendation in the report reads as follows:
“There has been a considerable amount of evidence given from some parts of the country of the difficulty experienced by Nonconformist bodies in obtaining a secure tenure of their places of worship, and schools connected with them, and of this being frequently felt to be a great hardship. The Committee think that it is most desirable on public grounds that all religious bodies should be enabled to obtain a secure tenure of such places of worship and schools, and they consider that the freeholder who has granted land for such purpose has no good reason to object to its being held in perpetuity, on his receiving the value of his interest. They therefore recommend that all religious bodies to whom land has been granted on lease by the freeholder for the erection of their places of worship and schools, should be empowered to purchase the fee, subject to the payment of fair compensation.”
A number of attempts were made to introduce legislation reflecting this recommendation, including in the early 1890s and again between 1910 and 1912. All failed for broader political reasons affecting the Government of the day. The Great War then of course intervened, and draft legislation was only reintroduced in 1920.
The long title of the 1920 Act describes it as:
“An Act to authorise the Enfranchisement of the Sites of Places of Worship held under Lease.”
Section 1(1) of the 1920 Act (as amended) provides:
“(1) Where premises held under a lease to which this Act applies are held upon trust to be used for the purposes of a place of worship [or, in connexion with a place of worship, for the purpose of a minister's house] 2, whether in conjunction with other purposes or not, and the premises are being used in accordance with the terms of the trust, the trustees, notwithstanding any agreement to the contrary (not being an agreement against the enlargement of the leasehold interest into a freehold contained in a lease granted or made before the passing of this Act), shall have the right as incident to their leasehold interest to enlarge that interest into a fee simple, and for that purpose to acquire the freehold and all intermediate reversions…”
Section 1(2) describes the leases to which the Act applies, in summary leases granted for life or for at least 21 years.
Section 2 deals with procedure. It effectively incorporates provisions governing compulsory purchase, including as to the consideration to be paid. This means that the starting point is, essentially, market value. Some adjustments are made, in particular the value of any buildings erected or improvements made by the trustees has to be excluded, and no allowance is made on account of the acquisition being compulsory. This is explained in Hague on Leasehold Enfranchisement (6 th ed) at 19–08 as simply excluding the 10% addition that at the time it had become customary to add on
compulsory purchases. Disputes over the amount of the compensation are now determined by the Upper Tribunal (Lands Chamber)Section 3 provides:
...“The estate in fee simple acquired by the trustees shall be held by them upon the same trusts as those upon which the leasehold interest would have been held by them if it had not been enlarged into a fee simple, and shall be subject to the same covenants and provisions relating to user and enjoyment and to all the same obligations of every kind other than the payment of rent as those to which the leasehold interest would have been subject if it had not been so enlarged…”
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