Oldham Borough Council v Attorney General

By an originating summons dated 16th May 1991, the Oldham Borough Council, as trustee of a charity founded by a deed of gift of 16th April 1962, sought, by way of relief under paragraph 1 of the summons, that it might be determined whether the court has power to authorise the council to sell or exchange all or any part of the freehold land, referred to as "the blue land", vested in the council as a trustee of the charity, being the existing site of the Clayton Playing Fields.

The summons further asked by paragraph 2 that if the answer to the question in paragraph 1 was Yes, the council might be authorised to sell or exchange the blue land on such terms as the court may think fit. What lies behind this is a proposal, which has been the subject of much local debate and controversy, that the existing site of the Clayton Playing Fields should be sold to developers for a very large price, and that with that price the council should acquire a new site for playing fields which—because the price will be so high—will have much better facilities, in the way of changing rooms and car parking and so forth, than the existing site.

The originating summons came before Chadwick J., and by his order of 7th April 1992 he declared on paragraph 1 of the originating summons that the court does not have power to authorise the council to sell or exchange the blue land referred to in the originating summons. The council now appeals against that declaration. In the meantime, paragraph 2 of the originating summons stands adjourned generally under the judge's order.

The sole defendant to the originating summons, and sole respondent to the appeal, is Her Majesty's Attorney-General, as representing the interests of charities generally. He, through Mr Unwin of counsel, supports the appeal, as he supported the council in the court below in relation to paragraph 1; but he reserves his position in relation to the proposal, outlined above, and paragraph 2 of the originating summons.

It follows that we in this court are in no way concerned with the details of the proposal or with whether it is a good idea, and we express no opinion at all on that. We have merely to decide question 1 in the originating summons as a question of law, and to that end we assume that the proposal, if approved and carried through, would result in the council holding a new site on precisely the same charitable trusts as are declared, with regard to the existing site, by the deed of gift of 6th April 1962 already mentioned.

Question 1 of the originating summons has been referred to as a question of jurisdiction, but that is a bit of an over-simplification of the question.

It is not in doubt as a general proposition that charitable trustees who hold land as part of the permanent endowment of a charity or land which has been occupied for the purposes of the charity have power to sell that land with the consent of the court (or of the Charity Commissioners). That power may be classified as (i) a power conferred by section 29 of the Charities Act 1960, which replaced similar provisions in section 24 of the Charitable Trusts Act 1853, as qualified by section 29 of the Charitable Trusts Amendment Act 1855 or (ii) a general power at common law curtailed by section 29 of the 1960 Act and { previously by the 1853 and 1855 Acts which made the consent of the court or the Charity Commissioners necessary or (iii) a power conferred by section 29 of the Settled Land Act 1925, which gives charitable trustees all the powers conferred by that Act on a tenant for life and on the trustees of a settlement; but for present purposes its precise classification is immaterial. In so far as the answer to question 1 depends on any of these Acts, the answer must be Yes.

The problem arises because of a different section, section 13 of the Charities Act 1960, subsections (1) and (2) of which provide as follows:

"13.—(1) Subject to subsection (2) below, the circumstances in which the original purposes of a charitable gift can be altered to allow the property given or part of it to be applied cy-pres shall be as follows:—

• (a) where the original purposes, in whole or in part, (i) have been as far as may be fulfilled; or (ii) cannot be carried out, or not according to the directions given and to the spirit of the gift; or

• (b) where the original purposes provided a use for part only of the property available by virtue of the gift; or

• (c) where the property available by virtue of the gift and other property applicable for similar purposes can be more effectively used in conjunction, and to that end can suitably, regard being had to the spirit of the gift, be made applicable to common purposes; or

• (d) where the original purposes were laid down by reference to an area which then was but has since ceased to be a unit for some other purpose, or by reference to a class of persons or to an area which has for any reason since ceased to be suitable, regard being had to the spirit of the gift, or to be practical in administering the gift; or

• (e) where the original purposes, in whole or in part, have, since they were laid down,—

  (i) been adequately provided for by other means; or

  (ii) ceased, as being useless or harmful to the community or for other reasons, to be in law charitable; or

  (iii) ceased in any other way to provide a suitable and effective method of using the property available by virtue of the gift, regard being had to the spirit of the gift.

(2) Subsection (1) above shall not affect the conditions which must be satisfied in order that property given for charitable purposes may be applied cy-pres, except in so far as those conditions require a failure of the original purposes."

Broadly the effect of that section is that an alteration of the "original purposes" of a charitable gift can only be authorised by a scheme for the cy-pres application of the trust property and such a scheme can only be made in the circumstances set out in subheads (a) to (e) of subsection (1) of section 13.

It follows that if the retention of a particular property is part of the "original purposes" of a charitable trust, sale of that property would involve an alteration of the original purposes even if the proceeds of the sale were applied in acquiring an alternative property for carrying out the same charitable activities. If so, a sale of the original property could only be ordered as part of a cy-pres scheme, and then only if circumstances within one or other of subheads (a) to (e) are made out. The particular bearing of that in the present case is that the council accepts, and the Attorney-General agrees, that the circumstances of this charity do not fall within any of these subheads.

If therefore, on a true appreciation of the deed of gift and of section 13, the retention of the existing site is part of the original purposes of the charity, the court cannot authorise any sale.

It is necessary therefore to look first at the terms of the deed of gift.

It is made between Ina Clayton of Oldham, a metal merchant, who is called "the Donor" of the one part and the Mayor, Aldermen and Burgesses of the County Borough of Oldham, the Urban District Council of Chadderton and the Urban District Council of Royton, collectively called "the Donees", of the other part. By local government reorganisation the present council became the successor to all three of the Donees; nothing turns on that.

There are then recitals:—

The land is then conveyed by the Donor to the Donees in pursuance of the said desire and without consideration in fee simple upon the trusts thereinafter declared.

These trusts are declared in clause 3 which is as follows:

"3. The Donees hereby declare that they will hold the said land upon trust to preserve and manage the same at all times hereafter as playing fields to be known as 'the Clayton Playing...