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Disposing of Charity land; the importance of compliance with the Charities Act 2011

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What constitutes sufficient compliance with Part 7 of the Charities Act 2011 when disposing of land owned by a charity? (David Roberts Art Foundation Limited v Riedweg [2019] EWHC 1358).


The Claimant, David Roberts Art Foundation (a charitable company) carried out a targeted marketing of a freehold property it owned in London and accepted an offer from Nicole Riedweg, the Defendant of £8.01m a month later. The Claimant subsequently instructed Cushman & Wakefield to prepare a valuation report for the property which valued it at £7.5m.

On the day that contracts were exchanged between the parties, the directors of the Claimant charity held a meeting. Contracts were exchanged and the Defendant paid a reduced deposit of £410,000 but later failed to complete. The Claimant served notices to complete and subsequently forfeited the deposit by notice of rescission and sold the property a year later for £5.5million.

The Claimant then issued a claim against the Defendant for a declaration that the contract had been lawfully rescinded and that the deposit was forfeit together with a claim for the balance of the deposit and damages.

The Defendant countered the claim by alleging that the contract was invalid, void or unenforceable for not complying with the requirements of Part 7 of the Charities Act 2011 (“the Act”) which governs the requirements for a charity to dispose of its land.

The Claimant applied to amend its claim to include an order for rectification of the contract to deal with the Act’s requirements if required. The Claimant then made a claim for summary judgment.

Charities Acts requirements

Part 7 of the Act places restrictions on how charities deal with their land.

Part 7 requires a charity to obtain the consent of the court or the Charity Commission before any dealings with land unless the charity can self-certify that it has complied with the requirements set out in Part 7. However, if they cannot comply with them or they are a certain type of disposal (e.g. to a connected party), then Charity Commission consent is required.

In this case in order to dispose of its land without a court order or Charity Commission consent, the following had to be achieved:-

1. Under section 122(2) the transaction documents had to include a certificate confirming that the land was held by an exempt charity and that the land is land to which the restrictions on disposition imposed by sections 117 to 121 apply in accordance with section 122(2) of the Act; and

2. Under section 122(3) the “instrument of the disposal”, in this case the transfer, must include a statement certifying that the charity trustees have the necessary power to dispose of the property and that they have complied with sections 117 to 121.

3. Under section 117(2):-

a. The charity must obtain and consider a written report on the proposed disposition from a qualified surveyor instructed by the trustees and acting exclusively for the charity,
b. advertise the proposed disposition for such period and in such manner as is advised in the surveyor’s report (unless it advises that it would not be in the best interests of the charity to advertise the proposed disposition), and
c. decide that they are satisfied, having considered the surveyor’s report, that the terms of the sale proposed are the best that can reasonably be obtained for the charity


The Defendant argued that the Claimant failed to comply with section 122(2) because the contract did not contain the necessary certificate and she argued that this section requires strict compliance.

However the court found that as the transfer was appended to the contract, it was an integral part of the contract and as such Section 122(2) had been complied with. The court found that compliance with section 122(3) was more important as this was the element intended to offer the purchaser protection and this had been complied with. Therefore the Claimant’s application for rectification was not required to be dealt with as the contract was not void.

The Defendant argued that the Claimant had not complied with section 117(2) because it didn’t instruct Cushman & Wakefield to prepare the report until after the property had already been marketed; the report stated that the property had been marketed for 3 months which was incorrect; it was only marketed for 1 month. Furthermore the report didn’t include advice as to the potential added value of advertising the property which advice is required to be given by the Quantity Surveyors Report Regulations. The property was not advertised.

The court also found that the minutes of the director’s meeting did not refer to the report having been considered nor did it provide any evidence that the directors were satisfied that the terms of the sale were for the best value reasonably obtainable for the charity.

The Decision

Whilst the court determined that the contract was not void; in respect of section 117(2) it found that the Claimant had provided insufficient evidence of compliance.

In an application for summary judgement the burden of proof is on the applicant and the Claimant failed to prove its compliance therefore its application for summary judgement was dismissed and the case will now proceed to trial.

The lesson in this case is for charities to be clear as to the requirements of the Act and to obtain a full report on valuation prior to marketing. If the court had seen minutes of the directors’ meeting which demonstrated that their decision had been taken on the basis of an accurate report then the outcome would likely have been different.

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