Local Authorities – don’t forget your duties as a trustee of land
15th June 2015
A recent report published by the Charity Commission provides a reminder of the duties that a Local Authority owes as a trustee of land, and the importance of separating local authority-owned land from charity land.
This case highlights the significant financial penalties and reputational risks that may result from a local authority being found to be in breach of trust.
The Oxley Park charity had been set up almost 100 years ago to provide an open space for recreation. Sheffield City Council is now the sole trustee of the charity. Part of the land had for some years had a leisure centre on it, the leisure centre having been built by a predecessor Trustee who mistakenly believed this to be within the charity’s objects.
The Council decided to close the leisure centre, and local residents set up another charity to keep it open. The Charity Commission became involved due to the need to regularise the historic breach of the trust caused by the existence of the leisure centre on land held in trust as open space.
Having canvassed local opinion, the Charity Commission took a pragmatic view and widened the objects of the charity to include both indoor and outdoor recreation.
How does this compare to other cases?
This case is in contrast to the 2012 case report on The Knotty Ash Special School Trust, in which the Charity Commission found that Liverpool City Council was in breach of its duties as sole trustee of the charity by allowing a lodge on the charity’s land to be occupied by a caretaker rent-free for over 20 years. The charity had lost over £90,000 in rent.
What does this mean for local authorities?
These cases highlight the importance of local authorities who are the trustees of charities holding land to check on whether that land is to be held for a designated purpose.
If the land is held, for example, as open land then the Charity Commission’s consent will be needed for any change of use or disposal to avoid any risk of the local authority being in breach of its duties as trustee.
The Charity Commission also highlighted in their report the importance therefore of local authorities keeping any land they hold as corporate trustees separate from their other land, to ensure that their duties as charity trustees are complied with.
How can Ward Hadaway help?
If you have any questions about the status of your local authority’s land or on any other issue raised by this update, please get in touch.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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