The Charity Commission recently published a case report relating to the use of land by a charity in breach of its objects.
Oxley Park (the 'Charity') was set up almost one hundred years ago, with the objects to provide an open space for outdoor recreation. The local Council, a corporate trustee of the Charity, held land on trust for the Charity. Most of the land had been used as a park, in line with the Charity's objects, but a part of the land had a leisure centre built on it, and was therefore being used in breach of trust.
The Council decided to close the leisure centre. A new charity was set up by a group of local residents so that they can lease the leisure centre from the Council and keep it open. However, as the leisure centre was situated on a land that was being used in breach of trust, the Council was unable to grant a lease without first the Charity Commission granting a scheme – a legal document providing permission to broaden the objects of the Charity.
Following the application, the Charity Commission conducted an investigation into the use of the Charity's land and found that the Charity was still fulfilling its original purpose through the park, and there was local support for the leisure centre to remain open. As a result, the Charity Commission agreed to widen the objects of the Charity to allow the piece of land to be used for indoor as well as outdoor recreation. This in turn allowed the Charity to grant a lease to the new charity which had been set up by the local residents.
This case report highlights the importance of the trustees knowing whether a land held by a charity is designated for a particular purpose and if it is, then ensuring that such purpose(s) are fulfilled.
Further, it is worth noting that whilst the Charity Commission was able to take a pragmatic approach and find a solution that suited the circumstances in this case, breaches of trust can often have very serious regulatory consequences for charities and their trustees.