The point of law that the Charity Tribunal is clarifying this week in a four-day hearing on benevolent funds, involving at least eight barristers and several more solicitors, is a hypothetical question, counsel for the Attorney General has admitted.
On the same day that the umbrella body for benevolent funds berated the Charity Commission for urging the Attorney General to bring the case at all, William Henderson for the Attorney General said the Tribunal's ruling would eliminate the "doubt" that was nagging the Commission about the issue.
The Commission suspects that the Charities Act 2006 has changed the law regarding certain types of benevolent charities and wants the Charity Tribunal to clarify whether or not they can still be charities. Such charities offer benefits only to a limited group, such as members of a family or ex-employees of a private company, and the Commission wants the Tribunal to decide whether they provide sufficient public benefit.
Henderson opened his submission to the Tribunal at the Rolls Building in London by saying the fact that so many benevolent funds were represented at the hearing demonstrated the importance of the issue at stake.
"Almost all of us are pushing in the same direction in terms of the answer we would like to see from the Tribunal on the central question of whether the relationship of the beneficiary, either to an individual or to a commercial company or by way of an unincorporated association, necessarily prevents those sort of trusts from being charities."
But he added that the fact the Attorney General and the charities all shared broadly the same view does not detract from the relevance of the answer the Tribunal will give, “because the Tribunal when determining references has a slightly different role imposed on it by the Charities Act from that normally adopted by the courts”.
He went on: "Typically a court hearing a piece of litigation would not determine hypothetical questions but the reference process as set up by the statute is specifically designed to enable the Tribunal to answer hypothetical questions that have enormous bearing on reality."
He said the answer the Tribunal gives will determine how the Charity Commission operates going forward. "Rather than worrying about whether that type of trust should be a charity, they will know whether they should or should not be in the future."
HMRC not interested
Henderson added that the institution that would be expected to have the greatest interest in the case was HMRC, but despite being told about it as long ago as February, the body had not applied to join or be heard.
He said that in its role of protector of charities in the public interest, the Attorney General's office would be arguing that the Charities Act 2006 has not changed the law with regard to benevolent charities, but it does agree with the Charity Commission that there is doubt. "If there had not been any doubt we would not necessarily have made the reference," he added.
In his substantive arguments, Henderson suggested that benevolent charities that provide benefits to just a limited group of people can be likened to animal charities in terms of public benefit. All charities do not have to provide benefit to the same section of the public, he pointed out.
“One sees that at its most extreme with animal charities,” he said. " There is no direct class of human beneficiary who would receive those funds as part of the distribution of the charity's bounty - the benefit there is solely the indirect or wider benefit to the public as a whole that arises from the prevention of cruelty to animals."
Charity Commission's position
The Charity Commission is claiming in its case that the Charities Act has changed the law on the point at issue, even though it does not genuinely advocate that point of view. It is merely arguing against the position taken by the Attorney General and the benevolent funds so that the Tribunal considers all possible conclusions.
The Commission has not hired a barrister; its case is being argued by its head of legal services, Kenneth Dibble.
