the lantern Charity & Education News Winter 2006/7
Charities Act 2006
1–2 Charities Act 2006 3
Spotlight – The Guide Dogs for the Blind
Ministers of Religion can Claim
Unfair Dismissal 5–6 Product Liability 5
Did You Know?
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
“In order to be a charity, an organisation must have a purpose
widely welcomed in the charity sector.
that falls within one of the 13 heads, and must be able to
Charitable Purposes and Public Benefit
demonstrate that it exists to benefit the public in some way”
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
A requirement for public benefit existed
criteria for testing public benefit. The Act
under the previous law and is a concept
now requires the Charity Commission to
familiar to charities. However, charities
issue guidance, after consulting publicly.
for the advancement of education or
It appears that the Commission will try
religion and charities for the relief of
to establish generally accepted standards
poverty, were previously presumed to
and encourage charities that charge
provide a public benefit and did not have
significant fees to ensure that they reach
to prove this unless there was some specific
out beyond those members of the public
reason to do so. The Act removes this
who benefit merely because they can
presumption, so that all charities (new
afford their fees.
and existing) must show that they are set The CIO – A New Vehicle for Charities
that it exists to benefit the public in
To the very end of the parliamentary
The Act creates a new legal vehicle
process there was debate about the
specifically for charities, the Charitable
up and operate for the public benefit.
heads, and must be able to demonstrate
Charities Act 2006 (continued)
“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”
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
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
The Commission’s objectives have been
make and present their decisions in
restated in the Act and a key point is that
future, given that these are open to
it remains a source of advice as well as
examination by the Tribunal.
a regulator. The Commission’s roles continue to include increasing compliance and
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
Payment of Trustees
accountability as well as public trust and
The concept of the unpaid, volunteer trustee
confidence in charities, but also include
remains at the heart of the charity sector
the requirements to promote awareness
but the Act does attempt to ease the
and understanding of public benefit and
personal burden of regulation and allows
the effective use of charitable resources.
the payment of a minority of trustees for
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
services, with appropriate safeguards. The Act will take several months, if not 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
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.
Michael King and Ann Phillips, partners at Stone King LLP, have been commissioned by the Law Society to write a book on the new Act entitled “Charities Act 2006: A Guide to the New Law”. The book will be published in the Spring of 2007.
Spotlight The Guide Dogs for the Blind
Whatever one’s age, whatever the condition,
brood bitches, specially chosen for
sight loss causes a huge adjustment
their intelligence and temperament.
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.
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
Guide Dogs has just completed a year
sighted person. The training is rigorous
of celebrations, marking the 75th
– it has to be – and not all the young
anniversary since the first working guide
dogs make the grade. For the majority
dog partnerships appeared on the
that do, the introduction to their new
country’s streets. Over three-quarters
owner marks the start of a partnership
of a century later, the charity’s dedicated
that will last around six years.
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
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 to www.guidedogs.org.uk
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. ■
dogs are born at home to the charity’s
Top Facts The Guide Dogs for the Blind Association ◆
Guide Dogs is known and loved
Guide Dogs is respected as an
for delivering first class mobility
influential charity campaigning on
services that meet the needs of
behalf of its service users particularly
blind and partially sighted people
in the areas of access and mobility.
and support each guide dog. ◆
There are currently around 4,700 guide dog partnerships in the UK.
with the guide dog at the core. ◆ ◆
It costs £10 a day to breed, train
Guide Dogs is acknowledged for its
The charity relies entirely on
eye health information and education
public generosity to fund its
campaigns and regarded for its
guide dog services.
prevention and care programme of ophthalmic research.
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.
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
A recent landmark decision from the
Church of God on the grounds that he
324 413 or e-mail firstname.lastname@example.org
Employment Appeal Tribunal means that
was not its employee, and therefore
for further information where contact
ministers of religion are now entitled to
had no entitlement to bring a claim.
not already specified.
The Employment Appeal Tribunal rejected
claim unfair dismissal from their churches if they are dismissed.
this argument, stating “if the relationship
Previously ministers of religion had always
between church and minister has many
been regarded by the law as appointed
of the characteristics of a contract of
to a holy office and not as employees
employment … these cannot be ignored
of a church.
simply because the duties are of a religious
Free Charity Workshop: Incorporation of Charities Venue: Offices of Stone King LLP 28 Ely Place London EC1N 6TD For further details contact Paula Urban on 020 7796 1007
Stone King has recently been involved
or pastoral nature.”
in a case where the Employment Appeal
The government has been considering
Tribunal has held that ministers are
giving employment law rights to
entitled to claim unfair dismissal against
ministers for several years. It seems
their church. This has enormous
the courts have given up waiting.
ramifications for all religious organisations,
Ministers tend to religious needs on
Charity Workshop in association with Chantrey Vellacott – first in a series:"Trustees Responsibilities – What You Need to Know" Venue: Royal Society of Medicine, Chandos House, 2 Queen Ann Street, London W1G 9LQ
which have previously enjoyed immunity
behalf of a church, just like medical
from being sued for unfair dismissal.
staff tend to physical needs on behalf
of an NHS trust – but nobody would
Catholic Independent Schools' Conference Vale Hotel, Hensol Park, Cardiff
Reverend Sylvester Stewart was removed as pastor from the Harrow congregation of the New Testament Church of God in
suggest that medical staff should be denied employment rights.
June 2005, due to allegations of financial
In December 2005, the House of Lords
impropriety. He claimed unfair dismissal,
held that a female minister in a Church
which was resisted by the New Testament
of Scotland parish was entitled to claim
IPD/HMC Seminar The Hunting Lodge Hotel near Market Harborough
sex discrimination, despite the previous ban on ministers exercising any
employment rights (Percy v Church of
Free Charity Workshop: Trustees Responsibilities/Governance Venue: Offices of Stone King LLP, 28 Ely Place, London EC1N 6TD For further details contact Paula Urban on 020 7796 1007
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.
“This has enormous ramifications
We will continue to report the Court's
for all religious organisations
findings as they happen. ■
which have previously enjoyed
immunity from being sued for unfair dismissal”
20 Mar Charity Workshop in association with Chantrey Vellacott – second in a series: "Trustees Responsibilities – What You Need to Know" Venue: Royal Society of Medicine Chandos House, 2 Queen Ann Street, London W1G 9LQ
19 Apr Free Charity Workshop: Planning for Financial Stability Venue: Offices of Stone King LLP, 28 Ely Place,London EC1N 6TD For further details contact Paula Urban on 020 7796 1007
Product Liability Is there a sting in the tail of that cuddly toy? Many charities buy new goods for resale
What could you be liable for?
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.
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
In English Law the maxim that is
includes the presentation of the product,
often quoted is "let the buyer beware".
any instructions or warnings on or
people do not read instructions as carefully
In many respects, however, this maxim
supplied with the product and the expected
as those who write them! This is particularly
no longer holds any truth, thanks to
use of the product. In practice, this is
so in the case of consumer products.
the European Product liability law of
a high standard, since people generally
"no-fault" or "strict" liability which
expect a lot (from a safety perspective).
Under the Act, if defective goods cause harm, the Producer is liable to compensate
underpins the Consumer Protection
an injured person. The injured person is only permitted to claim for death or
Under this legislation the manufacturer
instructions and warnings on the product.
personal injury or damage to personal
and certain others involved in the
It is normally not possible to build
(as opposed to business) property.
distribution of a “defective” product
a product that has a defect in it and then
Despite the title “Consumer Protection
are liable for death, personal injury
argue that it does not have a defect in
Act”, liability arises for business products
or specified property damage resulting
it, simply because an attempt has been
as well as consumer products.
from that product. This can be the case
made to warn people off using the product
even though they did not cause the
in a particular way. This is particularly
defect and even though, on their part,
so if the defect is likely to arise from any
there was no negligence towards nor
reasonably anticipated use of the product.
breach of any contract with the claimant.
Indeed, one should remember that most
Clearly, care must be taken when trying to escape liability merely by putting
Did you know? – News in Brief ◆
Companies Act 2006
This received Royal Assent on 8th November 2006 and will come into force
• the position of Company Secretary
questions in the meantime please contact
us on 01225 481 481.
between January 2007 and October 2008.
• ‘authorised signatories’, who do not
Its provisions cover both new and existing
need to be officers of the company,
companies, although transitional arrangements for existing companies are still being formulated. Some useful points of the Act are that:
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
• AGMs will no longer be mandatory for private companies;
when it is available, but if you have any
will no longer be mandatory for
publication of responses due in the New Year. We will be providing more information
“Get on Board”
Campaign to find new trustees. For more information go to www.governancehub.org.uk ◆
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.
Who can be liable? And how can you protect yourself?
Such a person is giving himself a liability
A charity is not able to exclude or
which he might not otherwise have had,
restrict its liability under the Consumer
and charities should consider their
Protection Act by any contractual provision.
Liability will apply not only to the
positions carefully: do the commercial
Indeed in some circumstances, it is a
manufacturer, but also to “any person,
benefits outweigh the risk? It is prudent
criminal offence to attempt to do so.
who, by putting his name on the product
for charities in these circumstances to
or using a trade mark or other distinguishing
seek an indemnity from the manufacturer
mark in relation to the product, has held
or their own supplier.
There are only limited defences available in the legislation. One practical defence arises where the state of scientific and
himself out to be the producer of the There are other situations where
technical knowledge within the industry
include a charity which has affixed its
a charity may find itself liable. Where
concerned at the time when the
name onto the product.
a charity supplies a product on which
manufacturer put the product into
(the “Producer”). This will often
the manufacturer is not identified, the
circulation was not such as to enable the
Where a component is defective, both
injured person may request the charity
existence of the defect to be discovered. ■
the manufacturer of the finished product
to name the manufacturer. 1 This is the wording from the Act.
and the manufacturer of the component will be responsible. Of particular
The same is true where it is otherwise
importance to charities is that the charity
not reasonably practicable for the injured
will be liable if, by putting its name
person to identify the manufacturer. If,
or other distinguishing feature on the
within a reasonable period after receiving
product, the charity “presents itself”
the request, the charity concerned fails
as the manufacturer. Although this may
to identify its own supplier, the charity
appear ambiguous, a charity would be
will be liable to the claimant as though
unlikely to benefit from that ambiguity,
he were the manufacturer.
since a charity is unlikely to want the adverse publicity associated with fighting an arguable product liability claim.
Another possible liability arises where the charity is the importer of the products into the European Union.
Stone King LLP 13 Queen Square Bath BA1 2HJ Tel. 01225 337599 Fax. 01225 335437 28 Ely Place London EC1N 6TD Tel. 020 7796 1007 Fax. 020 7796 1017 email: email@example.com www.stoneking.co.uk
The wording of the Directive is arguably wider: “any person who, by putting his name, trade mark or distinguishing feature on the product presents himself as its producer”.
Charity: Michael King Partner Robert Meakin Partner Ann Phillips Partner Jonathan Burchfield Partner Stephen Ravenscroft Partner Alexandra Whittaker Solicitor Vladka Thwaites Solicitor Martha Burnige Solicitor Matthew Waters Solicitor Education: Richard Gold Partner Michael Brotherton Solicitor Jane Graham Solicitor Naseem Nabi Solicitor
Legacy Disputes: Nick Watson Partner Robert Meakin Partner Paul Sutton Associate Dispute Resolution: Nick Watson Partner Paul Sutton Associate Michael Brotherton Solicitor Commercial Property: Hugh Pearce Partner Stephanie Howarth Associate Catherine Sanderson Associate Donna Del-Greco Solicitor Joanne Sturges Solicitor Kathrine Wardle Paralegal Amandeep Basi Paralegal
The Lantern deals with some current legal topics. It should not be used as an alternative to specific legal advice on the individual circumstances of a particular problem.
Corporate & Commercial: Roy Butler Partner Lynn Rigg Solicitor Employment: Nick Watson Partner Peter Woodhouse Partner Naseem Nabi Solicitor Child Protection: Steven Greenwood Partner Housing: Geraldine Winkler Legal Executive Trust and Taxation: Andrew Mortimer Partner Alison Allen Partner Charles Hayward Partner
© Stone King LLP 2007
Stone King LLP - registered limited liability partnership no OC315280, registered office 13 Queen Square, Bath BA1 2HJ