It is very common for local authorities to be appointed as trustee of local charities in order to provide continuity, but over time it is possible that the basis on which land is being held may be forgotten and it will often not be apparent from the registered title.
This case concerns the sale in 2004 by Dartford Borough Council of land forming part of Dartford’s Central Park to a developer as part of a larger redevelopment project which included the construction of a large new Tesco store and housing.
The land had been gifted to the town in 1903 by Lt. Col. Charles Newman Kidd, Chairman of Dartford Urban District Council and local brewer and brick maker. The land comprised five acres of meadows to be used as an area for recreation “in perpetuity as a public recreation ground and for no other purpose whatsoever”. In June 1905, the Central Recreation Ground as it was then called, was opened to the public with a great ceremony. The Recreation Ground included paths, grassed areas, plants and shrubs, a bandstand, a grandstand, shelter and toilets.
As the land was conveyed to be used for charitable purposes in perpetuity, this created a charitable trust.
At the time of the sale in 2004, Dartford Borough Council was the sole trustee of the charity called the Kidd Legacy, being part of Central Park Dartford. The solicitors acting for the local authority in the sale appear to have identified the existence and content of the 1903 Indenture by Lt. Col. Kidd, but interpreted this provision, wrongly, as imposing a restrictive covenant on the use of the land.
The individuals who brought the case against the local authority argued that the original terms of the legacy prevented the sale of land and that it should be reversed. However, whilst the Charity Commission (the Commission) does have power to reverse transactions, this is only possible where a buyer has not acted in good faith and it is rarely done where a transaction has actually completed.
The case went on for some years presumably at significant costs to all involved. The tribunal eventually concluded in 2012 that it could not reverse the sale because the buyer had acted in good faith. Instead, the local authority agreed to a remedial scheme approved by the Commission which involved compensation to the Kidd Legacy and the purchase of replacement land.
Lessons to be learned from this case:
- For local authorities: always check the basis on which you are holding land to establish whether you are holding it on your own account or on a form of trust. This is not always evident from Land Registry information and so the original deeds should always be retained for examination.
- For developers: when looking at buying land in which there is significant local community interest, be aware of the potential for there to be old charitable trusts which could restrict sale.
If you would like a review of the basis on which your charity or organisation is holding land, please contact Louisa Saunders or a member of our Commercial Property Team.
This article is from the April 2019 issue of Essential Trustee, our newsletter for charity trustees and senior management. To download the latest issue, please visit the newsletter section of our website. Law covered as at April 2019.
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