Varsani v Jesani (Jesani v Varsani)

The statutory cy-près jurisdiction does not require proof that a charity’s original purposes have become impossible or impracticable. It arises whenever one of the circumstances specified in section 13(1) of the Charities Act 1993 exists.

A religious charity’s original purpose may cease to provide a suitable and effective method of using its property where an unforeseen schism prevents formerly united adherents from worshipping together. The court must have regard to the spirit of the gift, meaning the donor’s underlying intention rather than merely the formal wording of the trust. It may therefore direct a scheme benefiting both groups without first deciding which group adheres to the true faith, where a scheme would be justified whichever answer that doctrinal inquiry produced.

A religious charity was established to promote the Swaminarayan faith according to the teachings and tenets of Muktajivandasji. Following a schism, the community divided into majority and minority groups which could no longer worship together. Each maintained that the other had departed from the faith, and the minority group was excluded from the charity’s facilities.

Carnwath J held that neither group had fundamentally departed from the original tenets and directed the preparation of a scheme dividing or regulating the charity’s property. The minority group appealed, arguing that the court first had to determine the original faith’s essential tenets and which group continued to profess them.

The central issue was whether section 13(1)(e)(iii) of the Charities Act 1993 permitted a cy-près scheme without resolving that underlying doctrinal dispute.

1. Appeals dismissed unanimously. Morritt LJ delivered the leading judgment. Chadwick LJ gave concurring reasons, and the President agreed with Morritt LJ. Carnwath J had jurisdiction under section 13(1)(e)(iii) of the Charities Act 1993 to direct a scheme, although his conclusion that neither group had fundamentally departed from the faith could not be sustained on the available material.

2. Section 13 enlarged the former cy-près jurisdiction. Impossibility or impracticability of the original purposes is no longer an indispensable condition. Jurisdiction exists where the circumstances fall within any applicable paragraph of section 13(1). Earlier religious-trust decisions requiring an inquiry into which faction adhered to the founders’ tenets arose under the narrower former law and did not require such an inquiry after the statutory change.

3. The applicable question was whether the original purpose had ceased to provide a suitable and effective method of using the property, regard being had to the spirit of the gift. The original purpose was clear, but an unforeseen and enduring schism meant that the two groups could not worship together and one group was excluded. The dispute could not be resolved as a matter of faith by the original teachings, the Helping Committee or a civil-court decision. The statutory test was therefore satisfied.

4. The spirit of a gift means its underlying or basic intention, rather than merely the form of the trust’s words or the conditions imposed to implement it. The court must consider that intention when making the value judgment required by section 13(1)(e)(iii), although it is not bound simply to reproduce it. Here the gift had been made for a united community. Dividing the property between both groups better reflected that spirit than excluding one group or consuming substantial charitable assets in litigation incapable of resolving the religious division.

5. No preliminary inquiry into which group represented the true faith was required. If only one group adhered to the original faith, a cy-près scheme remained available; if both did, an administrative scheme was available. The same scheme and factual justification therefore arose whichever answer the inquiry produced. The incompleteness of the minority group’s evidence caused no procedural unfairness material to jurisdiction.

1. Court of Appeal: The minority group’s appeals were dismissed unanimously. The court upheld the direction for a scheme under section 13(1)(e)(iii) of the Charities Act 1993, although for reasons differing from Carnwath J’s principal reasoning. Applications by the appellants and the Attorney-General for leave to appeal to the House of Lords were refused.

2. High Court: Carnwath J held that neither group had fundamentally departed from the founders’ tenets and directed the preparation of a regulatory scheme. Alternatively, he considered that section 13(1)(e)(iii) authorised a cy-près scheme.