City Council found to be using charity land inappropriately

23 Mar 2012 News

The Charity Commission has ruled today that Liverpool City Council was in breach of trust in allowing an employee to live on charity property rent-free for over 20 years.

The Charity Commission has ruled today that Liverpool City Council was in breach of trust in allowing an employee to live on charity property rent-free for over 20 years.

The council was the sole corporate trustee of former charity the Knotty Ash Special Schools Trust which owned land including a special school and cottage. The employee (who still lives in the cottage) was initially employed in 1989 as caretaker of the land but this service tenancy ceased years ago. The council claimed it was unable to remove the individual due to local authority tenants’ rights.

Although back-rent calculated at £89,000 for the cottage was paid by the council to the charity in January 2011, this was only after intervention by the Charity Commission, who published its findings on the case today.

There were also concerns raised over the delay of the transfer of trusteeship from Liverpool City Council to another charity, Liverpool Lighthouse Ltd who wanted to use the Knotty Ash Special Schools Trust land as an eco-garden.

The transfer process began in March 2009 but was still not concluded in August 2010 leading to a Liverpool Lighthouse complaint and the subsequent Charity Commission investigation which began in October 2010.

The Charity Commission found that in its role as trustee the council had not acted in the charity’s best interests, constituting a breach of trust. Furthermore, with the exception of the special school, the land "had not been used for any charitable purpose for a number of years".

A further £18,000 in cottage back-rent had been accrued since the decision to transfer trusteeship but after discussion between the charity and the Charity Commission this was waived with the proviso that the £89,000 be paid immediately by the council and the transfer be completed as soon as possible.

The charity's land was split and the trusteeship transfer was finally completed in September 2011. Knotty Ash Schools Trust was renamed Bright Park with Liverpool Lighthouse as trustee, in control of 1.6 hectares of the land, including the cottage. A new charity, the Clifford Holroyde Special Schools Trust was formed with Liverpool City Council as trustee, holding 1.2 hectares of the land where the special school is located.

The Commission advised of the wider implications for charities: “Many charities have a local authority as a sole trustee. Where this is the case, a local authority must make sure that when it is acting as a trustee it acts in the best interests of a charity and does not permit its interests as a local authority to interfere with its decisions as a charity trustee.”