Susan Hoggarth & Ors v Rev Neil Bowler & Ors

Charity trustees deciding whether to sell charity land must act in the charity’s best interests and seek the best terms reasonably obtainable. A later or higher offer does not automatically require trustees to abandon an existing transaction. They retain a discretion to act prudently, having regard to compliance with the bidding process, certainty of funding and the circumstances of the offer.

The court may intervene where there is a clear or anticipated breach of trust or fiduciary duty. However, charity proceedings brought by a person whose real interest is adverse to the charity may lack standing. Where the claim has no reasonable prospect of success, the court may strike it out even though the statutory authorisation process has not concluded.

The claimants brought charity proceedings concerning the proposed sale by the trustees of the Bridlington Charities of Charity Farm Caravan Park. Several claimants relied on their status as inhabitants of the charity’s area under Charities Act 2011, and C6 additionally relied on being a person interested in the charity.

The claim sought to restrain the sale and to stay the proceedings pending an application to the Charity Commission for permission to continue. The trustees contended that the claim was abusive, lacked standing and had no reasonable prospect of success. The central issues were standing, the trustees’ duties in conducting the sale, the court’s jurisdiction before statutory authorisation, and whether an interim injunction should be granted.

1. Standing. Three claimants were accepted to be inhabitants of the area of the charity and the action was properly constituted under s.115(1)(d) of the Charities Act 2011. The standing of others as local inhabitants was arguable but did not need to be determined. C6 was not a person interested in the charity under s.115(1)(c). His connection was through the tenant company and his interest was adverse to the charity, placing him on the other side of the fence.
2. Trustees’ duties on sale. The trustees had an overriding duty to obtain the best price reasonably available, but were entitled to exercise a prudent discretion. The mere production of a higher offer did not compel acceptance where the offer was late, conditional, non-compliant with the bidding requirements or unsupported by evidence of funding. The tenant company’s offers failed materially to comply with the process, and its composite settlement offer had not been maintained as a separate severable offer.
3. Merits and intervention. The evidence did not establish a breach of trust or duty. The trustees had accepted the highest compliant bid and were justified in rejecting the tenant company’s offers. The court’s jurisdiction to intervene in charity affairs extended to a clear anticipated breach, but that threshold was not met.
4. Interim relief and disposition. Although the court had jurisdiction to preserve the position pending statutory authorisation, the claim had no reasonable prospect of success. It was therefore struck out rather than stayed. The interim-injunction application was dismissed. Costs were to be determined on written submissions, with costs provisionally expected to follow the event.