Follow us on Twitter

Charity Trustees fear breach of trust and council acting ultra vires advice sought

0 votes
Its a story.  The village has a field handed over in 1920 to the council to hold in trust and for a committee of management to manage it.  This under the 1859 Recreation grounds act.    Over time the council and committee of management became intertwined as buildings appeared on the field and the committee of management got into financial difficulties. In 1964 the field and all on it were registered as a charity.  In 2007 the trustees voted to hand over the running of the field to the parish council.  This left a trustee committee (4 councillors and 6 others) in operation and annually a vote to appoint them at the annual parish meeting.   Unfortunately the trustees and the council failed to ratify the handover decision and change the governing deed.   Now the council is running the field as a council (not as a charity). The trustees have carried out a review of the charity and found that they are still responsible for it all and that various letters over time to the council and trustees from the charity commission have pointed this out (same question, same answer).   The trustees have engaged acre and soon the charity commission to help sort it out and have informed the council.  Unfortunately there are no councillors on the trustee committee due to a lack of volunteers. However the council does not recognise that they are acting ultra vires (the council never voted to accept the offer, and although the trustees vote each year to allow the council to manage the field, they do not write to the council asking them to do so, and the council do not vote to do it).   I think we are on the right track to sort it out (via acre and the charity commission), but wonder if anyone has advice as to get the councillors attention.  All trustees and councillors involved in 2007 have fled the coop, so its a set of new people trying to sort it out.  Although I am surprised that a council can manage a charity for so long without twigging that the absence of any reference to the charity, the trustees and founding doc in its procedures (and no document explaining who does what and when) and ditto the trustees.
by (1.2k points)

1 Answer

+1 vote
ACRE will sort this out for you. With another hat on, I can assure you that it's the sort of thing ACRE deals with all the time. Such situations are surprisingly common. In the meantime, the Council should cease to act, as they have no authority to do so. That doesn't mean that the grass cutting must stop, but the Council should not be seen to be exercising any control. Do only what ACRE tells you to do.

Retrospective reimbursement is unlikely to be required and there should be no naming and shaming. It's history now. The issues you might need to address in the near future will include insurance and ownership of assets if buildings or children's play equipment etc have been erected. I'm working on one at the moment where a Parish Council has built a community centre on land it thought it owned, but which actually belongs to a charity.
by (38.1k points)
Dave    Thanks and will report back.  We all have  high hopes of getting this resolved win win style.
I don't fall out with anything that Dave has said.  In the absence of that I would have said you should appoint solicitors to sort out the whole situation  - and I don't mean that should be adversarial - it is in the equal interest of both parties to have clarity.
John 1706   I would not disagree.  However the trustees do not have 2 pennies to rub together having handed over cash and various bits and bobs over the years in the 'not quite sure who did what' years.    Well about £1400 in the kitty!   So steady progress and legal advice when required, not adversarial and that in all probability linked to who owns what and how.
There's always a temptation to turn to solicitors in such a situation, but, if truth be told, the average solicitor is not well equipped to deal with such matters. There are specialists who have the knowledge and experience to take this on, but their bill may well be five figures. That is, in part, due to their inordinately high hourly charge-out rate, but also down to the fact that any negotiation with the Charity Commission is likely to be long-winded and laborious.
Dave    Thanks   The past docs show solicitor and charity commission input.  The trustees and council have seemed to ask the same question each time (what is the situation) and the answer is always the same.  This time all available docs have been gone though to understand what went on, and a lot of guidance gone through, and old stuff at that as guidance varies over time.  The idea is to admit we no further forwards in legal terms than 2007, and put a set of options on the table for the council and trustees to consider (and a few on either side are still wedded to the past).  Then work with both sides to get it fixed.  Thanks all for your comments and advice and I will turn up for some more soo I expect.
Without seeing the documents, I'm going to stick my neck out and say that a 1964 charity governing document would probably have specified that changes required the written consent of the Charity Commission, so without such consent, nothing changed legally in 2007, the Trustees should have continued to operate the charity in accordance with its governing document (i.e. AGM, appointments/reappointments, minutes, accounts etc), with the Council presumably acting as the Holding Trustee as landowner (although this would depend on the 1920 documentation).
Dave   The charity commission have only the 1920 Indenture, It was not changed in 1964 so it does not refer to more recent laws.  However, in past communications the charity commission have informed the council (who were trying to close the charity) that it needed the trustees to apply to do that, and the charity commission would then work with the council to set up the appropriate structure to manage the field in trust.  The council will be briefed next week at full council, but I think it will take a while to get the council to the table.
Just to note - the trustees were not happy the council had applied to get rid of them.
The Charity Commission will only accept instructions from the Trustees, as they don't recognise the Council as a controller of the charity and I'm not surprised the Trustees were unhappy!
An update.  The council were briefed, although most of the information is old hat.  The council queried the indenture, and decided to defer any request to appoint trustees for a further month, while noting they were busy until mid to late January at least.  They continue to vote on management matters although they have no powers to do so.  So we will now need to move to the second stage of solicitors letters and so forth in order to bring them to the table.  A trustee did suggest altering the indenture to remove the council as owner and their right to appoint 4 councillors as the council has voted twice not to appoint any.  A change of indenture to 2 councillors may be in order (or none).  But we remain hopefull that the council will come to its senses.
We are a bit unhappier now   The council has threatened the trustees with legal action, paid for out of precept!  What a sorry tale.
Legal action on what grounds? Is this a decision made by the Council and recorded in the Council's records? How has the threat been communicated? The Trustees are the Trustees and have documentary evidence to prove it. The Council has no evidence to support its claim. Who insures the charity and its assets?  Is there Trustee Liability cover in the insurance package?  If so, contact your insurer and advise them that the Council has threatened legal action. Your insurer will respond on your behalf.

I'd still ask your local ACRE to meet with two Councillors and two Trustees to go through the documents and explain their legal status in charity law.
With this council mr logic is not at home.   It was more a knee jerk reaction from the chair who sent an e.mail saying that the chair, vice chair and clerks had decided to take full legal advice due to the trustees stance against the council.    We briefed full council in dec (being given 10 minutes, no discussion no questions allowed) and it was clear that the councillors were completely at sea with it all.   The last time the issue was put to the council was in late 2019 (before my time), and the council  eventually replied, some months after being asked, that the clerk now had full authority to get legal advice and provide a response.   There was none, of course, and as per all the other queries over the years, it just dies.  To overcome that, following the briefing, we decided to brief every organisation who had activities on the field.  This has raised some interest, especially when those entities were asked if they knew the field was a charity and they should be paying market rent for being there, and to the charity not the council.   The good news is that we now have our own legal advice, and it just repeats what the charity commission has been telling the council since 2008, but with some good insights into what needs doing to correct the situation.     The Jan full council meeting agenda is just out, and I am glad to see the that the council is now going to get full legal advice to guide them.   But as they have done that 4 times before (and promised to do so in 2019 and then did not) we do not trust them.   Re acre, they have pulled back as it is a recreation field rather than a village hall.  We contacted Fields in Trust and they are looking at it.  The legal advisor we now have noted that the land registry does not show the field as being protected, and that it has a Field in Trust protection is incorrect.  There is no charity restriction on the land either, which may be an old problem or one created when the council tried to get rid of the charity in 2013.  I now see that the Jan agenda does not have a line item for the appointment of trustees by the council.  This was an agreed action from the Dec meeting, but the council has a habit of dropping actions!   It is all quite interesting and I have promised SLCC a paper on the subject.
The problem with the Council taking legal advice, as I've said before, is that this is outside the comfort zone of an average local solicitor. They may get the wrong advice.

Who does the Land Registry title show as the owner of the land? I don't think that Fields in Trust designation is recorded at the Land Registry. I designated a field a few years ago and I don't recall doing anything at the Land Registry. We simply have a deed signed by the Council and Fields in Trust recording the designation. The Land Registry title should show the legal owner of the land and whether they own it outright or hold it in trust for a third party.
Dave   The text from our advice is .....The property is registered at the land registry under title number xxx.  The freehold title to the land is held by t he Parish Council.  There is no charity restriction on the title, as there should be (this should be in form E, ensuring that the property cannot be disposed without following procedures in Charities Act 2011).  There is, however, a restriction stting hte property cannot be disposed of without the consent of the National Playing Fields Association (no known as Fields in Trust) and there is a reference to a deed of dedication dated 23 Dec 2019......     We are then advised to arrange for the charity restriction to be entered on the Land Register entry for the land, and to research details of arrangement with FIT and obtain a copy of the deed of Dedication.    Given that the council is not playing ball,  the trustees are having to do this without their input and help.     The land registry entry shows the Parish Council as owner of the land, with no mention of it being held in trust.  We think that was changed in 2013 when the council tried to get rid of all references to the council.       Clearly, it all needs sorting out.
Hi.  I commented on this thread a few weeks ago and expressed the opinion that it would be appropriate to appoint solicitors.  I agree with davetheclerk that the issue is probably "outside the comfort zone of an average local solicitor" but there are specialist charity law solicitors such as Wrigleys in Leeds and Anthony Collins in Birmingham.  Its a shame that the council and the trustees cannot jointly seek advice to clarify the situation and thereby avoid the adversarial approach currently being taken and the additional costs incurred; after all, both organisations serve the same community.  I was also a bit confused by the comment that "you have promised SLCC a paper on the subject".  I say that because I believe the remit of the SLCC is (assuming your clerk is member) to give advice to your clerk on a wide range of matters pertinent to the council including legal advice.  I think your clerk would be entitled advice on the matter currently under discussion from SLCC, but of course you would have to check that with them.
John   Thanks  The trustees have taken advice from specialist charity law solicitors  as advised on this forum and by acre.   This advice is to the trustees, but has been shared with council FOC (and paid for by trustees themselves so no cost to the charity).  The trustees have asked for talks with the council on several occasions since 1st Dec, but so far the council has not replied formally to any request.    Re SLCC, I am a member and asked for advice, but was informed that the issue was out with their remit, and specialist solicitors would be required.  Hence the promise of a paper when all sorted.  The council has now put this on the Jan full council agenda - to get specialist legal advice.  However, looking back this issue has cropped up every 2 years or so.  The trustees ask questions, the council promises action, and none turns up.  2 years ago the trustees were told the council was obtaining legal advice to answer a long standing query (asked every year for 11 years), but after further questioning, it turns out advice was not sought, and nothing was done.  Hence this time a more robust approach is required it seems to bring the council to the table.    This issue has taken some time to unravel and mistakes were made by  many on both sides in the intervening years.  We were advised that it would be difficult to get the council to the table, and it is proving to be so (the NALC guidance indicates this as well).   The council is in denial as it must be a shock to find that half of what you thought was yours to manage, should be managed by a charity committee of management.   We are sure that the advice the  council will get, will match that received by the trustees and from the charity commission and solicitors over the years, being that they are not the  managing trustees and that they should not be acting as such.    Just as we are sure that it will all be sorted over time.  But disappointed that the council has so far refused joint talks.

Welcome to Town & Parish Councillor Q&A, where you can ask questions and receive answers from other members of the community. All genuine questions and answers are welcome. Follow us on Twitter to see the latest questions as they are asked - click on the image button above or follow @TownCouncilQA. Posts from new members may be delayed as we are unfortunately obliged to check each one for spam. Spammers will be blacklisted.

You may find the following links useful:

We have a privacy policy and a cookie policy.

Google Analytics Alternative