Ted Loveday has succeeded in a landmark appeal to the First-tier Tribunal (General Regulatory Chamber) relating to a historic community building in west London.

On 21 September 2023, the Tribunal gave its decision in Miller and French v (1) Charity Commission (2) London Borough of Ealing (CA/2021/0009).

The decision demonstrates the importance of protecting charities from conflicts of interest when drawing up a cy-près scheme. It also serves as a reminder that whether a scheme is appropriate cannot be assessed in narrowly financial terms. Proper consideration must be given to the original purposes of the charitable gift.

The Victoria Hall in Ealing – which today forms part of the Ealing Town Hall complex – had been erected in the late Victorian period by public subscription from locals. By a deed executed on 6 December 1893, this property was to be held on a charitable trust for the purpose of “Meetings, Entertainments, Balls, Bazaars and other Gatherings whether Social or Political”. The original trustees were the Mayor and Aldermen of the Borough of Ealing (today represented by Ealing London Borough Council).

For many years, the Council had forgotten about the existence of the charitable trust and treated the Victoria Hall as part of its own corporate property.

In the mid-2010s, the Council entered into a deal with a property developer called Mastcraft to sell off much of the Town Hall complex, including the Victoria Hall, for redevelopment as a luxury hotel.

Following campaigns from members of the local community, the Council eventually accepted that it did not own the Victoria Hall, and held it on the terms of the charitable trust established in 1893. In order to proceed with the deal, it therefore required a scheme for the application of the Charity’s property cy-près.

On 12 March 2021 the Charity Commission made a cy-près scheme following discussions with the Council. Under the terms of the scheme, the property would be leased for 250 years to Surejogi, a private company established by Mastcraft to redevelop the Ealing Town Hall complex, and then under-leased back to the Council. The charity would receive the income from community hiring of Queen’s Hall, another part of the Town Hall complex, as well as a premium paid up-front. Surejogi would receive the income from community hiring of Victoria Hall itself.

An appeal was brought against the Commission’s decision by two members of a local organisation, The Friends of Victoria Hall, who were campaigning to save the building for the community as a performing arts, exhibition and meeting space. The appellants argued:

• The Charity’s property could not be applied cy-près, since none of the circumstances listed in Section 62(1) of the Charities Act 2011 had arisen.
• The scheme was not appropriate having regard to the matters listed in Section 67(3) of the Act, including “the desirability of securing that the property is applied for charitable purposes which are close to the original purposes.”
  

The Tribunal found that the Charity’s property could be applied cy-près, expressing the view that the Charity was “not self-sustaining on the facts”: [32]. However, it allowed the appeal on the second ground. Considering the matter afresh, the Tribunal stated that “the proper test is whether the transaction […], taken as a whole, on the assumption that it is the only offer available in respect of the Town Hall complex, should be permissible” [45]. Applying this test, the Tribunal found that the Scheme was not appropriate and gave the Commission and the Council 185 days to draw up a new scheme in consultation with the appellants: [59]. It set out a series of conditions that any appropriate scheme should satisfy, including the following:

• There should be “arms-length scrutiny” of the apportionment of income received from hiring out parts of the Town Hall complex between the charity and Surejogi: [49].
• Since it was the decisions of the Council, acting as local authority, that had led to a cy-près occasion arising, the Council should bear the transaction costs: [50].
• The Council should not enjoy free use of the charity’s property. It should pay commercial rates: [51]
• The scheme should include an agreed “community use protocol”: [54].
  
• The scheme should set up an advisory committee to “manage any actual, or perceived, conflict of interest” between the charity and the Council: [44], [55]. It should also make provision for an alternative trustee: [57].

The case was heard over a 3-day trial in February 2023 and judgment was handed down on 21 September 2023. Ted Loveday was instructed by Laura Soley and Jaqui Symcox of Bates Wells.

This update was written by our pupil Robert Watt with input from Ted Loveday.

The full decision can be found here.