Litigation and Employment
Group
Treasury Solicitor’s Office
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Messrs Winckworth Sherwood
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Please Quote: LT7 3331K/DBE/IE
Your Reference: ARHS/29899/1/PCEM
5th February 2009
Dear Sirs,
DEAN AND OTHERS -v- BURNE AND OTHERS (HC07C03109 - THE DIOCESE)
DEAN -v- BOWLBY AND OTHERS (HC07C03020 - THE PARISH)
Thank you for your dated 27th January 2009.
The legal advice given to the Attorney General is privileged and confidential. However, on
the footing that the Claimants wil need to proceed with their applications in any event, and
that the Attorney General’s counsel wil be making submissions and informing the court of
the Attorney General’s approach on the hearing of those applications, I set out in this letter a
summary of the Attorney General’s approach based on the advice which has been given to
her.
1.
The central issues in both sets of proceedings are whether in the events which have
happened:
(a)
The two charities (“the Diocesan Trust” and “the Parish Trust”) should be control ed
by the fol owers of the Moscow Patriarchate or those of the Ecumenical Patriarchate and
whether the assets of the charities, and in particular the Cathedral in Knightsbridge which is
held by the Parish Trust, should be applicable for the promotion (i) of the religious lives of the
Moscow Diocesan and Parish communities, or (i ) of the religious lives of the Ecumenical
Vicariate and Parish communities.
(b)
The circumstances are such as (i) to raise the jurisdiction in the court to make a
scheme which divides the assets into separate trusts for the competing sets of objects and
putative control ers, and, if so, (i ) whether this is a case in which such jurisdiction should be
exercised.
2.
As a matter of construction of the Trust Deeds there were two sets of circumstances
which both had to exist in order to trigger the possible operation of the procedure set out in
the Trust Deeds for altering their objects, namely (1) that there was doubt as to the continuity
of the life of the Parish or Diocese and (2) that there was doubt as to the identity of the body
community or congregation which should be entitled to the benefit of the trusts.
3.
Bishop Osborne’s evidence is fatal to a contention that the second condition was
satisfied. In paragraph 3 of Bishop Osborne’s statement dated 7th August 2008, effectively
on behalf of the Ecumenical adherents of whom he is a central figure, he says:
“No-one disputes that the Diocese of Sourozh and the London Parish under the Moscow
Patriarchate remain in existence as legal entities and canonical bodies after my removal as
bishop and replacement by first Archbishop Innocenti and then by Bishop Elisey. What has
happened, however, is that large-scale changes in the composition of the London community
during the years leading up to the summer of 2006 led to radical changes in the life of the
London parish and therefore of the Diocese.”
It is plain that there were a substantial number of persons left in the Moscow Parish and
Moscow Diocesan communities after Bishop Basil and the new Ecumenical adherents had
left.
4.
Leaving aside the possibility of a cy pres scheme, the analysis is then quite simple:
(a)
The objects of the charities were the promotion of the religious lives of the Moscow
Parish and Moscow Diocesan communities. A substantial number of the members of those
communities chose to leave, and to join the Ecumenical (Constantinople) communities, but,
absent any change in the objects of the Trusts, the Moscow Parish and Moscow Diocesan
communities continued to exist, and the promotion of the religious lives of those
communities remained the objects of the charities. This part of the analysis is analogous to
that of a members’ club: if you join you can use and enjoy its assets, when you leave, you
leave, you do not take the club’s assets with you.
(b)
Whatever doubt there may have been about continuity of the life of the parish or
diocese, on the basis of Bishop Osborne’s statement quoted above, there was no doubt as to
the identity of the body, community or congregation entitled to benefit under the trusts, and
accordingly on the footing that the conditions were cumulative, not alternative, the possibility
of altering the objects of the trusts under the procedures contained within the Trust Deeds
did not arise.
(c)
It fol ows that the disputed resolutions were ineffective and the objects of the Trusts
remain unchanged.
5.
Unless they are changed by the operation of a power contained in the constitution of
a charity, the objects of an existing charitable trust can only be changed if the circumstances
come within one or more of the heads listed in s.13 Charities Act 1993, as amended. The
potential y relevant set of circumstances in the present case is that set out in s.13(1)(e)(i i)
which provides:
“where the original purposes, in whole or in part, have, since they were laid down
...
(i i) ceased in any other way to provide a suitable and effective method of using the property
available by virtue of the gift, regard being had to the appropriate considerations,”
The “appropriate considerations” are defined as meaning the spirit of the gift and the
social and economic circumstances prevailing at the time of the proposed alteration of the
original purposes.
6.
The Ecumenical adherents suggest that the “spirits of the gifts” were to benefit
Russian Orthodox communities with particular features, specifical y:
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(a)
As to the practice and propriety of certain religious and practical activities which were
approved of by the communities and by the local priests and bishops.
(b)
The communities were general y composed of long term UK residents and their
families.
(c)
A relatively loose degree of control was imposed by the Moscow Patriarchate,
principal y because of the controls imposed by the former Soviet Union on religion and on the
movement of individuals, money and information.
They say that things have changed in that:
(a)
Certain religious and practical activities have changed or been banned (e.g. having
prayers said for non-members of the orthodox church).
(b)
The natures of the communities have changed in that (i) many of the older
established members have left to join the Ecumenical communities; and (i ) large parts of the
Moscow communities are now made up of recent immigrants from Russia.
(c)
The Moscow Patriarchate now imposes a far greater degree of control.
They say that by reason of these changes the Ecumenical communities and their religious
activities now resemble the original Moscow Parish and Diocesan communities and their
activities far more closely than do the current Moscow Parish and Diocesan communities. In
consequence they imply that the application the charities’ assets for the promotion of the
religious lives of the Moscow Parish and Diocesan communities would not be within the
spirits of the gifts.
7.
The Attorney General’s view, on advice, is that the spirits of the gifts were to promote
the religious lives of the particular specified communities; with the possibility of changing the
communities which were to benefit if doubts arose as to the continuity and identities of those
communities. It was inherent in the gifts and in their spirits that the membership of the
communities might change. It is accepted that the other changes identified by the
Ecumenical adherents do represent some departure from the spirits of the gifts; but the main
parts of the spirits as wel as of the letters of the gifts were to benefit the specified
communities, which part of the spirit can stil be satisfied by applying the trusts’ assets for the
promotion of the religious lives of the Moscow Parish and Diocesan communities. The
differences identified by the Ecumenical adherents are not so substantial as to cause any
great departure from the spirits of the gifts.
8.
The test under s.13(1)(e)(i i) Charities Act 1993 is not whether the application of the
funds is within the spirit of the gift, but whether the specified purposes have ceased to
provide a suitable and effective method of using the trust property “regard being had to the
spirit of the gift and to the social and economic circumstances”. Thus, even if the continued
application of the charities’ assets in accordance with the letter of the Trust Deeds caused
there to be a major departure from the spirits of the gifts, the court or the Charity Commission
would only be required to “have regard to” that in considering whether the application of the
assets in accordance with the letter of the Trust Deeds had ceased to be a suitable and
effective method of using the trust funds. The application of the assets in accordance with
the letter of the Trust Deeds does not have to continue to be the most suitable and effective
method of using the assets having regard to the spirit of the gift in order to prevent the cy
pres jurisdiction from arising under s.13(1)(c)(i i), it has to have ceased to have been a
suitable and effective use. The Attorney General’s view, on advice, is that the application of
the assets in accordance with the letter of the Trust Deeds would continue to be a suitable
and effective method of using the assets, regard being had to the spirit of the gift.
Accordingly in her view the jurisdiction to make a cy pres scheme has not arisen.
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9.
Even if the jurisdiction to make a cy pres scheme had arisen, the court or the Charity
Commission would not be obliged to make a scheme; they would have a discretion as to
whether to do so. Given the great practical difficulties in formulating the basis on which a
division of the assets should be made and the likely difficulty and cost of effecting such a
division (for example how would the Cathedral or its use be dealt with?), when balanced
against the fact that, at most (and contrary to the Attorney General’s view) the jurisdiction to
make a scheme is marginal, and the continuation of the existing trusts would not prevent the
effective use of the assets for charitable purpose, even if that use was not the most suitable;
the Attorney General does not wish to ask the court or the Charity Commission to direct a
scheme.
10.
The present case is distinguishable from the leading case on the possible application
of s.13 Charities Act 1993 where there is a split between two factions of a religious charity,
namely Varsani v. Jesani [1999] Ch 199:
(a)
In Varsani v. Jesani the Court of Appeal held, amongst other things, that it could not
determine which of the competing group’s sets of beliefs was the set of beliefs which the
trust existed to promote. In contrast in the present case there is no issue as to whether a
particular sets of beliefs is or is not the set of beliefs which the charities exist to promote.
There is merely an issue as to whether the internal powers to change the objects of the
charities had arisen or was properly exercised; as to which there is no need to make any
finding as to which of any set of beliefs the trusts existed to promote.
(b)
In Varsani v. Jesani the Court of Appeal held that the original purposes had ceased to
provide a suitable and effective method of using the property, regard being had to the spirit of
the gift, within section 13(1)(e)(i i), and that accordingly the court had jurisdiction to order a
scheme. In the present case the original purposes continue to provide a suitable and
effective use of the property, even if that is not the most effective use of the property.
(c)
In the present case the communities which the trusts exist to benefit are defined in
the Trust Deeds by reference to “the Parish” and “the Diocese”, the communities as so
defined remain identifiable and undivided. In contrast in Varsani v. Jesani the community
whose religious purposes the court held was intended to promote was, by the time of the
hearing, a divided community.
(d)
In the present case the trusts are far more sophisticated than they were in Varsani v.
Jesani and, importantly, there were already schisms and divisions in the Orthodox faith at the
times when the trusts were created, with the consequence that, unlike in Varsani v. Jesani,
the spirit of the gift was not to promote the religious lives of al members of the orthodox faith
in the United Kingdon or in a particular area of it, but were to promote the religious lives of
those who were members of the Parish or Diocese from time to time.
(e)
In the present case, unlike in Varsani v. Jesani, the Trust Deeds themselves
contemplated a possible schism or discontinuity and provided for what was to happen in that
event when doubts arose as to the identities of the Parish and the Diocese.
(f)
In Varsani v. Jesani it was practicable to divide the assets between the competing
groups. Specifical y the majority group obtained the temple, whilst the minority group were
provided with cash with which to purchase and/or build a smal er, alternative temple. In the
present case the appropriate basis for any division of the assets or the use or sharing the
Cathedral is unclear.
Points (a) to (e) above are il ustrated by comparing the facts of the present case with
Chadwick LJ’s analysis in Varsani v. Jesani at p.238B:
“... It is not, of course, the case that the property could not be used in accordance
with the original purposes. Clearly it could be so used by the group who were found, on this
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hypothesis, to be the fol owers of the true faith. But to appropriate the property to the sole
use of one group, to the exclusion of the other, would not - in a case like the present - be a
suitable and effective method of using that property, regard being had to the spirit of the gift.
“The need to have regard to the spirit of the gift requires the court to look beyond the original
purposes as defined by the objects specified in the declaration of trust and to seek to identify
the spirit in which the donors gave property upon trust for those purposes. That can be done,
as it seems to me, with the assistance of the document as a whole and any relevant
evidence as to the circumstances in which the gift was made. In the present case I have no
doubt that the spirit in which property was given in 1967 was a desire to provide facilities for
a smal but united community of the fol owers of Muktajivandasji in and around Hendon to
worship together in the faith of Swaminarayan. The original purposes specified in the
declaration of trust - that is to say the promotion of the faith of Swaminarayan as practised in
accordance with the teachings and tenets of Muktajivandasji - are no longer a suitable and
effective method of using the property given in 1967, or added property held upon the same
trusts, because the community is now divided and cannot worship together. Nothing that the
court may decide wil alter that. To hold that one group has adhered to the true faith and that
the other group has not wil not alter the beliefs of that other group. The position wil remain
that the community cannot worship together. To appropriate the use of the property to the
one group to the exclusion of the other would be contrary to the spirit in which the gift was
made.”
11.
The Claimants represent the interests of the Moscow Patriarchate. The disputed
resolutions appear to have been procured by the adherents to the Ecumenical communities.
The Defendants (apart from the Attorney General) are adherents of the Ecumenical
communities. Where there are issues between two established bodies or interests as to
which of them or their adherents are entitled to benefit from a particular charitable trust, and
those issues have to be determined by way of litigation, the court would expect the
competing established bodies or their representatives to be parties (see Ware v.
Cumberledge (1855) 20 Beav 503 at pp.510-512). The additional Defendants were
specifical y joined by Deputy Master Bartlett’s orders dated 14th April 2008 for the purpose of
representing (respectively) the members of the Ecumenical Parish and Vicariate.
Accordingly, although in form the proceedings are charity proceedings to which the Attorney
General is a necessary party, in substance the issues lie between the adherents of the
Moscow and the Ecumenical Patriarchates.
12.
The persons who have been joined as representatives of the Ecumenical interests
have indicated no desire to take an active role and say that they wil rely on the Attorney
General to advance appropriate arguments. However, large quantities of evidence have
been filed on behalf of the Defendants (other than the Attorney General), the essential thrust
of which has been to attempt to answer or contradict the Claimants’ cases in various
respects.
13.
The Attorney General’s duty is to protect the interests of charity. This does not
extend to requiring her to advance arguments in favour of a particular charitable interest
against those of another charitable interest in a case such as the present, in which she
considers on advice that the arguments would fail. Even less so in a case where, as here
representatives of the competing factions are parties to the proceedings. Indeed, at least
prima facie, it would be a waste of charity money and public resources for her to do so. Nor
does the Attorney General’s duty require her to apply for a cy pres scheme in circumstances
where she considers that there is no such power and where, even if it existed, its exercise
and the working out of its exercise would be difficult and expensive.
14.
As regards the costs of the actions: I explained in my letter to you of 14th January
2009, that the Attorney General might wel form the view that the Claimants’ and her costs
should be paid by the trustees and/or the Ecumenical Parish and Ecumenical Vicariate
without recourse to the Parish or Diocesan Trust Funds. The factors which give rise to the
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possibility of the Attorney General forming that view are summarised in the next two
paragraphs.
15.
General y where there is a dispute as to the construction and administration of a trust:
(a)
The trustees should be neutral and if they act neutral y and reasonably they wil get
their costs paid either by one or other of the competing factions or out of the trust fund.
(b)
As regards the parties representing the competing factions: depending on the nature
and method of conduct of the dispute, either the loser wil be ordered to pay the winner’s
and, possibly the trustees’ and, in a charity case, the Attorney General’s costs, or some or al
of the costs may be ordered to be paid out of the trust fund, or some or al of the parties may
be left to pay their own costs.
16.
Before the litigation started the trustees appear to have formed the view that the
purported transfer of control and objects to the Ecumenical Patriarchate was valid and
effective. Further, they were deeply involved in setting up and implementing that purported
transfer in that they cal ed the meetings at which the resolutions purportedly effecting it were
passed. They now profess neutrality; and maintain that the voluminous evidence filed by
them was put in with a view to assisting the court and not from any particular standpoint. In
reality that evidence appears to attempt to make a case against the Claimants and for the
validity of the resolutions transferring the Trusts to the Ecumenical Patriarchate and/or for a
scheme. The trustees cal ed the meetings on the basis of professional advice. However:
(a)
On the material at present before the Attorney General the precise nature of that
advice is unclear. For example it is unclear whether the trustees were advised that it was
their duty to cal the meetings or whether they were merely advised that they had power to do
so or whether they were advised that there were doubts as to or risks involved in the steps
which they proposed to take and, in due course, took in that regard.
(b)
There is no material at present before the Attorney General to indicate that the
trustees obtained the advice or approval of the Charity Commission or the Court before
cal ing the meetings and proceeding on the basis that the objects of the charities had been
changed.
(c)
The Ecumenical adherents initiated the dispute by purporting to pass resolutions
transferring control of al the asset to themselves, and, until after the Moscow Patriarchate
adherents sought to recover control of the assets, the Ecumenical adherents appear not to
have suggested a division of them and appear to have been happy to have had the sole
control of and benefit from them.
17.
I explained in my letter to you dated 14th January 2009 that the Attorney General
would be likely to be assisted in forming her view in relation to the possible liability of the
trustees for costs if she knew what advice the trustees had been given in relation to the
cal ing of the meetings and the implementation of the resolutions, and whether and why they
had not sought the advice or approval of the Charity Commission or the court before acting.
In particular whether the trustees were advised that it was their duty to cal the meetings or
whether they were merely advised that they had or might have power to do so or whether
they were advised that there were doubts as to or risks involved in the steps which they
proposed to take and, in due course, took in that regard.
I trust that you and your clients wil find the above of assistance. Perhaps the key
point is that made in paragraph 13 above: the Attorney General’s duty does not extend to
requiring her to advance arguments in favour of a particular charitable interest against those
of another charitable interest in a case such as the present, in which she considers on advice
that the arguments would fail. Even less so in a case where, as here, representatives of the
competing factions are parties to the proceedings. Indeed, at least prima facie it would be a
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waste of charity money and public resources for her to do so. Nor does the Attorney
General’s duty require her to apply for a cy pres scheme in circumstances where she
considers that there is no such power and where, even if it existed, its exercise and the
working out of its exercise would be difficult and expensive.
Yours faithful y
D B EDMONDS
for the Treasury Solicitor
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