School's out

A case which caused a flutter among critics of the Charity Commission was its decision in September 2010 to accept the Druid Network as a charity '“ and not, as some media commentators sloppily report, of the druids generally.

One criticism focuses on the incongruity of tolerance of paganism and the assault in the name of public benefit on schools that advance learning within institutions operating in conventional schooling system. More seriously others question the wisdom of not involving the Inland Revenue and the Attorney General in the process on such a groundbreaking case.

The fact that the particular charity was not of a size to be worth anything to the revenue discounts the 'thin end of the wedge' argument which has rightly concerned the Inland Revenue in the past. The classification of the Druid Network as a religion seems at first sight outlandish. Pagan religions long superseded by the established religion hardly promote any easily recognisable public benefit, and fit as uneasily into the comparable area occupied by conventional religion.

In the case of AG v Herzer involving the Church of Unification, a substantial body of expert evidence was filed showing that the church was regarded as a religion by many academics specialising in comparative religion and theology being in the Christian tradition. Yet a professor of the Open University appears to have been the only academic proffering evidence here and unease must be the reaction of the charity lawyer to this decision, even though formally ratified by the board which has a paucity of lawyers of the type needed to deal with sucha novel case as this one.

Politics and AidWatch

The judgment of last June's AidWatch case in the High Court of Australia was finally handed down on December and upheld the charitable status of the campaigning charity Aid Watch emerged on 1 December. It was greeted by the propagandist element in the third sector media as a new dawn for politicking and free speech worldwide. But on closer examination it appears to be a case turning on its own individual facts (and the mixed perceptions of them) and on the colouring constitutional arrangements that apply in Australia and the course taken by the Australian courts.

Five members of the court accepted the submissions of AidWatch that its generation of public debate was a charitable purpose under the fourth head in Pemsel's case because its activities contributed to public welfare. The other two members of the court took, as we shall see, a frankly more traditional line that is more closely in accordance with English law.

The court decided that the English case of McGovern v Attorney General [1982] Ch 321 at 340 did not apply in Australia where there was no general doctrine which excluded political objects from charitable purposes paragraph 48.

The system of law which applies in Australia postulates for its operation the very agitation for legislative and political changes of which Dixon J spoke in Royal North Shore Hospital v Att Gen NSW [1938] 60 CLR 396. It was the operation of these constitutional processes that contributes to public welfare. A court administering a charitable trust for that purpose is not called upon to adjudicate the merits of any particular course of legislative or executive action or inaction which is the subject of advocacy or disputation within the constitutional processes

After hearing the content of the campaigning, Heydon J formed an adverse view of the idea it was 'advancing debate'. He held that the appellant advanced 'points of view' but did not 'generate debate in the sense of stimulating others to contribute competing points of view so that some higher synthesis or more acute understanding should result'.

Those who ran the appellant did not see themselves as philosophers merely talking about the world or encouraging others to talk about the world; they saw their task as being to change the world. That was the whole point of creating an activist and solidarity organisation. To be activist was to advocate energetic action. It wanted its views implemented not debated. It wanted obedience not conversation, put in a manner inviting a response but in a manner seeking compliance. It did not want dialogue nor even too long monologue.

Kiefer J rejected the submission that the purposes were for the public benefit because it generates public debate and said it could not be accepted at a number of levels. Its assertion of its view cannot without more be assumed to have that effect '“ its activities are not directed to that end. If they were directed to the generation of a public debate about the provision of aid, rather than to the acceptance by the government and its agencies of its views of the matter, education might be said to be generated by the debate in that area.

But that was not the case. Its pursuit of a freedom to communicate views did not qualify as for the public benefit. The Full Court of the Federel Court held that the main purpose of the appellant was a political one, namely the assetion of its view and that it was not possible to determine the promotion of one view rather than another was for the public benefit.

The benefit of public schools

The profession and the sector in general is by now familiar with the fact that the guidance of the commission on public benefit is now under challenge by the Independent Schools Council (the ISC). This was initiated by an application for permission to bring an application for judicial review proceedings in the Administrative Court.

On 7 October 2010 Sales J heard the application for permission to apply for judicial review, and, relying on section 31a of the Senior Courts Act 1981, he transferred the judicial review proceedings to the Upper Tribunal (Tax and Chancery Chamber) to be joined up and heard together by a High Court (chancery judge and some otherdesignated judges of the Upper Tribunal). The application was surprisingly opposed by the Charity Commission.

The gist of their bold objection was the application was vitiated by delay and in any case added nothing of substance to the Attorney General's reference. Given that the judicial review case was principle based, whereas the AG's reference was fact based, the court had no difficulty in dismissing the arguments as unmeritorious. The whole of the ISC's case was arguable, and, contrary to the commission's argument, it was clear that it had the potential to add to the scope of the arguments arising out of the reference.

The commission's arguments on delay were likewise unappealing. As Sales J made clear the ISC had acted responsibly in taking time, as it needed to do, to review the application of the commission's guidance in its public benefit. Similarly it was an appropriate step for the ISC to engage the commission in dialogue before launching its formal claim. of judicial review and has been the subject of a reference by the Attorney General.

The questions raised by the Attorney General merit a visit before the expected hearing in May 2011, expressed though they are in the somewhat tortuous language and style of the interrogatories satirised in RE Megarry's first Miscellany at Law (1955) 46-47. Shorn of these resonances, though no doubt intended to ask a series of neutrally testing fact-based formulaics, they convey the perhaps unintended impression that the guidance is being treated as regular (which the critics, who have bothered to go into the law, say on principle and on the authorities that it is not).

The Charity Commission's strategy to date is a puzzle. The senior silks who have drawn attention to the deficient citation of authority in the guidance will be looking to see whether proper attention citation and emphasis is given to such cases as the strong Court of Appeal authorities like Smith v Kerr [1902] 1 Ch 774 and R v Income Tax Social Commissioners ex p University College of North Wales[1909] 5 TC408; 78 LJ KB 576. Further clarity will be afforded by such directions by the tribunal, especially as regards institutions such as charity hospitals and prestigious cultural institutions such as the Royal Opera House Covent Garden.

Cuts and worries

It is in the contemplation of the Charity Commission and its critics that the year 2011 is the year in which the public benefit requirement is to be reviewed as part of the overall review of the 2006 Act as well as of well the independence of the commission. The existence of an impending hearing in May 2011 on the public benefit issues does not dispose of the matter. An inquest is inevitable on the outcome of that hearing.

The accusations that the commission has compromised its independence or had its independence queried are matters of concern that also fall to be dealt with by November 2011. We may pass over the chattering comments made on the internet on alleged Labourite proclivities in the commission and look at the comments of professionals at the top end of the law. Two leading critical accounts in the course of the past year are the Politeia paper (2009) of Professor Peter Luxton and the robust article by Stanley Brodie QC in the economic affairs publication Charity Commission Politics and Politicisation.

The Luxton thesis is that there is a serious problem with the commission's approach to political activities. He avoids dealing with the wider issue of the politicisation of the civil service by the last government, an issue which is itself a serious problem requiring attention. The public benefit of a political purpose cannot easily be determined.

If the Charity Commission is to increase public trust and confidence in the charities in accordance with its public confidence objective, that depends on the public having confidence in the Charity Commission as regulator applying the law and operating independently of political bias.

The chair and another non-legal member of the board were paid-up members of the Labour party, and the third also non-legal member was a former member of the Labour party. One third of the members are or have been members of the Labour party.

The suggestion is that the structure and membership of the board should be reformed on a non-partisan basis in which the legally qualified membership of the board is strengthened to enable the law to be applied and to prevent guided responses to political policies on either side.

The need for a suitors fund previously debated and rejected before is still there. The well-buttressed Brodie article, too long to summarise here, goes further and suggests, in the light of the mounting criticisms, abolition of the new commission and a reverter to independent commissioners with independence prescribed.

Finally, note should be taken of an interesting rumination on the prospects of the Charity Tribunal by its chairman in Strike outs and elevations: Is the Charity Tribunal really fit for purpose? reproduced on the website of the Liverpool Charity Law and Policy Unit website. It follows a study carried out by Debra Morris that appeared reproduced on the Charity Tribunal website. It recommends direct access to the tribunal instead of submitting to protracted internal reviews by the commission of appealable matters and recommends the power to grant Re Beddoe relief and to allow meritorious litigation.