A First-tier Charity Tribunal case was reported recently, brought by a community group Friends of the Victoria Hall (FoVH) in Ealing. Ealing Council were proposing to sell the Victoria Hall to a luxury hotel developer.
The building of the hall was funded by public donations and it was placed into a charitable trust in 1893. Ealing Council was the sole trustee of the charity but forgot about the existence of the charitable trust, treating it as part of its own property. The Council had been paying for upkeep of the hall. They decided to sell the Town Hall complex including the Victoria Hall as ‘it was uneconomic to retain it’.
Having been persuaded of the charity’s existence, the Council had to apply for a cy-près scheme to sell the hall. A cy-près situation arises where the original purposes of the trust cannot be effectively fulfilled, taking into consideration the original spirit of the trust and the social and economic circumstances currently prevailing. The Charity Commission granted a cy-près scheme on the basis that the Victoria Hall was “not self-sustaining on the facts”. This permitted the Council to enter into a complex arrangement leasing the property to a hotel developer, with some elements of community use. There was a great public outcry and the FoVH were able to challenge the scheme as persons affected by it.
The tribunal reviewed the decision to make the scheme. The tribunal held that a cy-près scheme situation had arisen, but that the scheme failed to protect the interests of the Victoria Hall charitable trust. The Charity Commission has been ordered to prepare a new scheme within 6 months in consultation with FoVH. The order contained a number of conditions that the new scheme should fulfill, including that the council should pay the charity for its use of the Hall and an independent trustee be appointed.
This case highlights the risks for local authorities holding charitable property without a clear understanding of the need to keep and run it separately from the rest of their property.
Charity Commission guidance is available here
The tribunal case is available here
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