Page 1

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


Conference Dates

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

some way.

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

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

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

11 Jan

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

18 Jan

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

19/20 Jan

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.

1/2 Mar

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

8 Mar

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

Lynden Lever

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

Act 1987.

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

private companies;

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 ◆

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

product 1

(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.

Your Contacts

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:

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


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