Summary

The court determined the appropriate form of relief to be granted following its finding that guidance issued by the Charity Commission regarding the public benefit requirement contained in the Charities Act 2006 s.2 and s.3 was wrong in law and obscure.

Facts

The court was required to determine the appropriate relief to be granted to the claimant independent schools council (ISC). In Independent Schools Council v Charity Commission for England and Wales (2011) UKUT 421 (TCC), (2011) ELR 529, the court held that it was for the trustees of independent schools to determine how those schools were to be run as charitable trusts, and that guidance issued by the respondent commission regarding the public benefit requirement contained in the Charities Act 2006 s.2 and s.3 would have to be corrected. The parties were unable to agree a form of order for relief. The ISC considered that those parts of the guidance which had been found to be wrong in law or obscure should be quashed. The commission argued that only declaratory relief should be granted, with the effect of the decision being incorporated into the guidance.

Held

(1) The instant case was not one in which illegality had been shown or in which the commission had taken an unlawful action or promulgated an unlawful decision. In discharging its statutory obligation under s.4 of the 2006 Act the commission had issued the guidance based on a very detailed analysis of the complex and difficult case law relating to public benefit, and following thorough consultation. Limited parts of the guidance had been held to be wrong or obscure. The commission had the power to revise the guidance but, although a working party had been constituted to do so, it remained unrevised. Under s.4(6), charity trustees were obliged to take account of the guidance, which was a significant factor in support of the ISC's contentions, and the guidance should be quashed unless there were good reasons for not doing so. In the absence of any formal revision, trustees had to have regard to it as it stood and had to make a statement in their annual report to that effect. It was unsatisfactory that trustees should be required to have regard to flawed guidance and then work out for themselves what qualification should be made in the light of the court's decision. It was also unsatisfactory that they should have to state in their annual report that they had had regard to guidance which was flawed. The fundamental difficulty was that the finding that the guidance was wrong in some respects did not displace the duty under s.4(6). It would be difficult to formulate declaratory relief with the required clarity and the proper order was therefore one quashing certain parts of the guidance (see paras 11-18 of guidance). (2) The commission would be given the opportunity to withdraw those parts of the guidance which would otherwise be quashed. It was to provide an undertaking to withdraw the relevant parts of the guidance within 21 days from the date of release of the instant decision. Failure to comply with that undertaking would result in a quashing order (para.26).

Judgment accordingly