Oldham Borough Council v Attorney-General

Section 13 of the Charities Act 1960 governs alteration of a charity’s original purposes through cy-près, not every sale of charitable land. Where the charitable purpose is an activity, such as providing playing fields, the existing land may be sold and replacement land acquired on the same trusts without a cy-près scheme, subject to applicable consent requirements. A donor’s intention that particular land be preserved or used permanently does not, without more, make retention of that land an original purpose. The position differs where the identity or qualities of the property itself form part of the charitable purpose. In that event, sale alters the original purposes and requires a cy-près scheme if authorised under section 13.

Oldham Borough Council, trustee of a charity established by a 1962 deed of gift, sought declarations concerning the proposed sale or exchange of land used as the Clayton Playing Fields. The proposal contemplated acquiring replacement playing-field land with the proceeds, to be held on precisely the same charitable trusts.

Chadwick J declared that the court lacked power to authorise the sale. The Council appealed, supported on this issue by the Attorney-General. The parties accepted that the circumstances did not fall within any of the statutory grounds for a cy-près scheme. The central issue was whether retention of the particular land formed part of the charity’s original purposes under section 13 of the Charities Act 1960.

Appeal allowed unanimously. Dillon LJ gave the leading judgment, with Russell and Farquharson LJJ agreeing. The declaration of Chadwick J was set aside, the contrary declaration was substituted, and the proceedings were remitted to the Chancery Division for consideration of paragraph 2 of the originating summons.

1. Existing sale powers. Charitable trustees generally have power, with the consent of the court or the Charity Commissioners, to sell land forming part of a charity’s permanent endowment or occupied for charitable purposes. The power might arise under section 29 of the Charities Act 1960, the earlier statutory provisions, the common law, or section 29 of the Settled Land Act 1925. Its precise classification was immaterial.
2. Original purposes. Section 13 concerns alteration of a charity’s original purposes through cy-près. The deed showed that the donor intended the land to be used permanently as playing fields for the relevant inhabitants. That intention did not, however, make retention of the particular land a charitable purpose or a condition qualifying the use of land as playing fields. The binding trusts identified the charitable purposes, but did not require the original land to be retained when replacement land could carry out the same purposes.
3. Cy-près distinction. A sale would require a cy-près scheme where the identity or qualities of the property itself made the purpose charitable, such as a historically significant house, a building of architectural merit, or land of outstanding natural beauty. That was different from a charity whose purpose could be performed on substitute land.
4. Legislative purpose and prior law. Section 13 was directed to cy-près applications and did not extend the requirement for a scheme to transactions which, before the 1960 Act, could be achieved by selling charity land and reinvesting the proceeds for the charity’s benefit. The authorities concerning administrative provisions and conditions were distinguished or approved according to that distinction, including [1984] Ch.143, [1947] Ch. 183, [1923] 2 Ch. 332, and 22 Beav 288.

The court expressed no view on whether the proposed sale was desirable. The Charities Act 1992 was not yet in force and was not considered.

• Court of Appeal (Civil Division) — Appeal allowed; Chadwick J’s declaration was set aside and the contrary declaration made. Proceedings were remitted to the Chancery Division for consideration of paragraph 2.
• High Court, Chancery Division — Chadwick J declared on 7 April 1992 that the court lacked power to authorise sale or exchange of the land.