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Contents Charities Act 2006
Charity & Education News Winter 2006/7
the lantern
In November 2006, the Charities Bill finally
completed its passage through Parliament
and received Royal Assent. The Charities
Act 2006 has been one of the most
carefully prepared pieces of primary
legislation in recent times and has been
widely welcomed in the charity sector.
Charitable Purposes and Public Benefit
Of all the measures in the new Act, none
has attracted as much attention as the
re-definition of charitable purposes and
the “public benefit” test. The Act lists 12
charitable purposes representing the
broad spectrum of charitable causes
under the previous law and a 13th purpose
representing other existing charitable
purposes and purposes analogous to
accepted charitable purposes. In order
to be a charity, an organisation must have
a purpose that falls within one of the 13
heads, and must be able to demonstrate
that it exists to benefit the public in
some way.
1–2 Charities Act 2006
3 Spotlight – The Guide Dogs
for the Blind
4 Ministers of Religion can Claim
Unfair Dismissal
4 Conference Dates
5–6 Product Liability
5 Did You Know?
A requirement for public benefit existed
under the previous law and is a concept
familiar to charities. However, charities
for the advancement of education or
religion and charities for the relief of
poverty, were previously presumed to
provide a public benefit and did not have
to prove this unless there was some specific
reason to do so. The Act removes this
presumption, so that all charities (new
and existing) must show that they are set
up and operate for the public benefit.
To the very end of the parliamentary
process there was debate about the
“In order to be a charity, an organisation must have a purpose
that falls within one of the 13 heads, and must be able to
demonstrate that it exists to benefit the public in some way”
criteria for testing public benefit. The Act
now requires the Charity Commission to
issue guidance, after consulting publicly.
It appears that the Commission will try
to establish generally accepted standards
and encourage charities that charge
significant fees to ensure that they reach
out beyond those members of the public
who benefit merely because they can
afford their fees.
The CIO – A New Vehicle for Charities
The Act creates a new legal vehicle
specifically for charities, the Charitable s
Charities Act 2006 (continued)
Incorporated Organisation, designed to
allow charities to take on corporate
status, with limited liability. As CIOs,
charities can take advantage of corporate
status and the protection of their
members /trustees from civil claims and
liabilities, without needing to register with
Companies House and report to two
regulators. Secondary legislation will be
required before it is available for use by
existing or new charities.
A New Charity Commission
The Commission’s objectives have been
restated in the Act and a key point is that
it remains a source of advice as well as
a regulator. The Commission’s roles continue
to include increasing compliance and
accountability as well as public trust and
confidence in charities, but also include
the requirements to promote awareness
and understanding of public benefit and
the effective use of charitable resources.
Charity Tribunal
The establishment of a dedicated Tribunal
to consider appeals from determinations
of the Charity Commission was warmly
welcomed by the charity sector. It remains
to be seen how the Tribunal will work in
practice and whether legal advice or
advocacy will be essential for charities
appearing before the Tribunal.
The principal benefit of the establishment
of the Tribunal may well be the clarity
with which the Commission will have to
make and present their decisions in
future, given that these are open to
examination by the Tribunal.
Payment of Trustees
The concept of the unpaid, volunteer trustee
remains at the heart of the charity sector
but the Act does attempt to ease the
personal burden of regulation and allows
the payment of a minority of trustees for
services, with appropriate safeguards.
Spending of Endowed Capital
There are welcome powers for smaller
charities to spend permanently endowed
capital, including land, while larger
charities will also be able to spend such
capital if the Charity Commission concur
with the rationale for doing so.
Mergers
The Act contains several measures to
facilitate mergers and re-organisations,
as charities seek to evolve to meet the
needs of the communities they serve.
Most importantly, future legacies to the
original charity can now benefit the new
or merged charity if the merger has
been registered with the Commission.
The slightly amended cy-près powers
may also be helpful here.
Fundraising
The Act brings in a unified system to
regulate public charitable collections and
collections for benevolent and philanthropic
organisations. It also requires clearer
statements to be made by professional
fundraisers and commercial participators
as to what they will earn.
Implementation and Review
The Act will take several months, if not
longer, to be fully in force. As is often now
the case within primary legislation, the
Minister for the Cabinet Office must
review the operation of the Act within five
years of its passing though the Government
has agreed to review the public benefit
issue within 3 years. n
“As is often now the case within primary legislation, the Minister
for the Cabinet Office must review the operation of the Act
within five years of its passing”
Michael King and Ann Phillips, partnersat Stone King LLP, have beencommissioned by the Law Society to write a book on the new Act entitled“Charities Act 2006: A Guide to theNew Law”. The book will be publishedin the Spring of 2007.
SpotlightThe Guide Dogs for the Blind
Whatever one’s age, whatever the condition,
sight loss causes a huge adjustment
to everyday routines and activities.
Above all, it can mean a severe loss of
mobility. The Guide Dogs for the Blind
Association is here to help, with the
extraordinary partnership between guide
dog and visually impaired owner at
the core.
Guide Dogs has just completed a year
of celebrations, marking the 75th
anniversary since the first working guide
dog partnerships appeared on the
country’s streets. Over three-quarters
of a century later, the charity’s dedicated
team of staff, volunteers and supporters
continue to provide freedom, mobility
and independence for blind and partially
sighted people.
Every year around 1,200 would-be guide
dogs are born at home to the charity’s
brood bitches, specially chosen for
their intelligence and temperament.
Volunteer puppy walkers introduce the
young pups to the sights, sounds and
smells of a world in which they will play
such an important part. After just over
a year the young dogs start their formal
training, where they learn the skills
needed to guide a blind or partially
sighted person. The training is rigorous
– it has to be – and not all the young
dogs make the grade. For the majority
that do, the introduction to their new
owner marks the start of a partnership
that will last around six years.
The couple spend three weeks of intensive
training with Guide Dogs’ specialist staff
before they are ready to face new everyday
challenges – the bond between guide dog
and visually impaired owner has begun. n
u Guide Dogs is known and loved
for delivering first class mobility
services that meet the needs of
blind and partially sighted people
with the guide dog at the core.
u The charity relies entirely on
public generosity to fund its
guide dog services.
u Guide Dogs is respected as an
influential charity campaigning on
behalf of its service users particularly
in the areas of access and mobility.
u Guide Dogs is acknowledged for its
eye health information and education
campaigns and regarded for its
prevention and care programme
of ophthalmic research.
u It costs £10 a day to breed, train
and support each guide dog.
u There are currently around 4,700
guide dog partnerships in the UK.
u The working life of a guide dog
is about 6 years, and a guide dog
owner could have 6 or 7 dogs
during their lifetime.
Top Facts The Guide Dogs for the Blind Association
For further information about The Guide Dogs for the Blind Association– including details on how to become a puppy walker, volunteer or fundraiser– phone 0870 600 23 23 or log-on towww.guidedogs.org.uk
A recent landmark decision from the
Employment Appeal Tribunal means that
ministers of religion are now entitled to
claim unfair dismissal from their churches
if they are dismissed.
Previously ministers of religion had always
been regarded by the law as appointed
to a holy office and not as employees
of a church.
Stone King has recently been involved
in a case where the Employment Appeal
Tribunal has held that ministers are
entitled to claim unfair dismissal against
their church. This has enormous
ramifications for all religious organisations,
which have previously enjoyed immunity
from being sued for unfair dismissal.
Reverend Sylvester Stewart was removed
as pastor from the Harrow congregation
of the New Testament Church of God in
June 2005, due to allegations of financial
impropriety. He claimed unfair dismissal,
which was resisted by the New Testament
Church of God on the grounds that he
was not its employee, and therefore
had no entitlement to bring a claim.
The Employment Appeal Tribunal rejected
this argument, stating “if the relationship
between church and minister has many
of the characteristics of a contract of
employment … these cannot be ignored
simply because the duties are of a religious
or pastoral nature.”
The government has been considering
giving employment law rights to
ministers for several years. It seems
the courts have given up waiting.
Ministers tend to religious needs on
behalf of a church, just like medical
staff tend to physical needs on behalf
of an NHS trust – but nobody would
suggest that medical staff should be
denied employment rights.
In December 2005, the House of Lords
held that a female minister in a Church
of Scotland parish was entitled to claim
sex discrimination, despite the previous
ban on ministers exercising any
employment rights (Percy v Church of
Scotland). So Reverend Stewart’s case
is an extension of the employment rights
of ministers.
However, The New Testament Church
of God is seeking the permission of
the Court of Appeal to appeal the
decision and if granted is unlikely to
be heard until sometime in 2007.
We will continue to report the Court's
findings as they happen. n
Lynden Lever
Ministers of Religion can Claim Unfair Dismissal
Conference Dates
Stone King is often involved in producing
seminars and conferences. The following
are currently being planned.
Please contact Annette Kirby on 01225
324 413 or e-mail [email protected]
for further information where contact
not already specified.
2007
11 Jan Free Charity Workshop: Incorporation ofCharities Venue: Offices of Stone King LLP 28 Ely Place London EC1N 6TD For furtherdetails contact Paula Urban on 020 7796 1007
18 JanCharity Workshop in association with ChantreyVellacott – first in a series:"TrusteesResponsibilities – What You Need to Know" Venue: Royal Society of Medicine, ChandosHouse, 2 Queen Ann Street, London W1G 9LQ
19/20 JanCatholic Independent Schools' ConferenceVale Hotel, Hensol Park, Cardiff
1/2 MarIPD/HMC SeminarThe Hunting Lodge Hotel near MarketHarborough
8 MarFree Charity Workshop: TrusteesResponsibilities/Governance Venue: Offices of Stone King LLP, 28 Ely Place, London EC1N 6TD For further details contact PaulaUrban on 020 7796 1007
20 MarCharity Workshop in association withChantrey Vellacott – second in a series:"Trustees Responsibilities – What You Need to Know" Venue: Royal Society of MedicineChandos House, 2 Queen Ann Street, London W1G 9LQ
19 AprFree Charity Workshop: Planning for FinancialStability Venue: Offices of Stone King LLP, 28 Ely Place,London EC1N 6TD For furtherdetails contact Paula Urban on 020 7796 1007
“This has enormous ramifications
for all religious organisations
which have previously enjoyed
immunity from being sued for
unfair dismissal”
u Companies Act 2006
This received Royal Assent on 8th
November 2006 and will come into force
between January 2007 and October 2008.
Its provisions cover both new and existing
companies, although transitional
arrangements for existing companies
are still being formulated.
Some useful points of the Act are that:
• AGMs will no longer be mandatory for
private companies;
• the position of Company Secretary
will no longer be mandatory for
private companies;
• ‘authorised signatories’, who do not
need to be officers of the company,
may execute documents; and
• there are changes to the number of
votes needed to pass a written resolution.
All of these aspects and more have been
put out to consultation with the first
publication of responses due in the New
Year. We will be providing more information
when it is available, but if you have any
questions in the meantime please contact
us on 01225 481 481.
u “Get on Board”
Campaign to find new trustees. For more
information go to www.governancehub.org.uk
u Fundraising Standards Board
New self-regulatory body aimed at
reassuring the public and raising standards
in the sector. Sign up to the Promise and
the Codes of Practice and be able to display
the“tick”logo.
Many charities buy new goods for resale
to the public. But are all those charities
as aware as they ought to be of their
potential liability should some of those
products not be of a sufficient quality?
All new products, including “free gifts”
are caught by the legislation.
In English Law the maxim that is
often quoted is "let the buyer beware".
In many respects, however, this maxim
no longer holds any truth, thanks to
the European Product liability law of
"no-fault" or "strict" liability which
underpins the Consumer Protection
Act 1987.
Under this legislation the manufacturer
and certain others involved in the
distribution of a “defective” product
are liable for death, personal injury
or specified property damage resulting
from that product. This can be the case
even though they did not cause the
defect and even though, on their part,
there was no negligence towards nor
breach of any contract with the claimant.
What could you be liable for?
The key to the Consumer Protection Act
is the concept of a “defective” product.
A product is defective when it does not
provide the safety which persons are
generally entitled to expect, taking all
the circumstances into account. This
includes the presentation of the product,
any instructions or warnings on or
supplied with the product and the expected
use of the product. In practice, this is
a high standard, since people generally
expect a lot (from a safety perspective).
Clearly, care must be taken when trying
to escape liability merely by putting
instructions and warnings on the product.
It is normally not possible to build
a product that has a defect in it and then
argue that it does not have a defect in
it, simply because an attempt has been
made to warn people off using the product
in a particular way. This is particularly
so if the defect is likely to arise from any
reasonably anticipated use of the product.
Indeed, one should remember that most
Product LiabilityIs there a sting in the tail of that cuddly toy?
people do not read instructions as carefully
as those who write them! This is particularly
so in the case of consumer products.
Under the Act, if defective goods cause
harm, the Producer is liable to compensate
an injured person. The injured person
is only permitted to claim for death or
personal injury or damage to personal
(as opposed to business) property.
Despite the title “Consumer Protection
Act”, liability arises for business products
as well as consumer products.
Did you know? – News in Brief
s
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The Lantern deals with some current legal topics. It should not be usedas an alternative to specific legal advice on the individual circumstancesof a particular problem.
© Stone King LLP 2007email: [email protected]
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Your Contacts
Charity:Michael King PartnerRobert Meakin PartnerAnn Phillips PartnerJonathan Burchfield PartnerStephen Ravenscroft PartnerAlexandra Whittaker SolicitorVladka Thwaites SolicitorMartha Burnige SolicitorMatthew Waters Solicitor
Education:Richard Gold PartnerMichael Brotherton SolicitorJane Graham SolicitorNaseem Nabi Solicitor
Legacy Disputes:Nick Watson PartnerRobert Meakin PartnerPaul Sutton Associate
Dispute Resolution:Nick Watson PartnerPaul Sutton AssociateMichael Brotherton Solicitor
Commercial Property:Hugh Pearce PartnerStephanie Howarth AssociateCatherine Sanderson AssociateDonna Del-Greco SolicitorJoanne Sturges SolicitorKathrine Wardle ParalegalAmandeep Basi Paralegal
Corporate & Commercial:Roy Butler PartnerLynn Rigg Solicitor
Employment:Nick Watson PartnerPeter Woodhouse PartnerNaseem Nabi Solicitor
Child Protection:Steven Greenwood Partner
Housing:Geraldine Winkler Legal Executive
Trust and Taxation:Andrew Mortimer PartnerAlison Allen PartnerCharles Hayward Partner
Such a person is giving himself a liability
which he might not otherwise have had,
and charities should consider their
positions carefully: do the commercial
benefits outweigh the risk? It is prudent
for charities in these circumstances to
seek an indemnity from the manufacturer
or their own supplier.
There are other situations where
a charity may find itself liable. Where
a charity supplies a product on which
the manufacturer is not identified, the
injured person may request the charity
to name the manufacturer.
The same is true where it is otherwise
not reasonably practicable for the injured
person to identify the manufacturer. If,
within a reasonable period after receiving
the request, the charity concerned fails
to identify its own supplier, the charity
will be liable to the claimant as though
he were the manufacturer.
Another possible liability arises where
the charity is the importer of the
products into the European Union.
A charity is not able to exclude or
restrict its liability under the Consumer
Protection Act by any contractual provision.
Indeed in some circumstances, it is a
criminal offence to attempt to do so.
There are only limited defences available
in the legislation. One practical defence
arises where the state of scientific and
technical knowledge within the industry
concerned at the time when the
manufacturer put the product into
circulation was not such as to enable the
existence of the defect to be discovered. n
1 This is the wording from the Act. The wording of the Directive is arguablywider: “any person who, by putting his name,trade mark or distinguishing feature on theproduct presents himself as its producer”.
Who can be liable? And howcan you protect yourself?
Liability will apply not only to the
manufacturer, but also to “any person,
who, by putting his name on the product
or using a trade mark or other distinguishing
mark in relation to the product, has held
himself out to be the producer of the
product1 (the “Producer”). This will often
include a charity which has affixed its
name onto the product.
Where a component is defective, both
the manufacturer of the finished product
and the manufacturer of the component
will be responsible. Of particular
importance to charities is that the charity
will be liable if, by putting its name
or other distinguishing feature on the
product, the charity “presents itself”
as the manufacturer. Although this may
appear ambiguous, a charity would be
unlikely to benefit from that ambiguity,
since a charity is unlikely to want the
adverse publicity associated with fighting
an arguable product liability claim.