Meeting documents

Board of Trustees of the Recreation Ground, Bath
Wednesday, 6th June, 2007

The Bath Recreation Ground Trust

A Strategic Review

30 May 2007

Report Structure

1. Introduction

2. Executive Summary

3. Background to the Strategic Review

4. Objectives of the Trust

5. Trust Board

6. Current usage

7. Financial position

8. Role of the Charity Commission and involvement with Trust

9. Legal considerations

10. High Court Judgement & subsequent legal advice

11. Bath Rugby Club

12. Bath Leisure Centre

13. Public Consultation

14. Financial evaluation of options

15. Future Management Arrangements

16. Conclusions - consideration of options

17. Recommendations

Appendices

1) History of the Rec

2) Report of Consultation - BDOR(pdf - 351kb)

3) Financial Options Appraisal - Ernst & Young(pdf- 2, 826kb)

4) Bath Rugby Club Prospectus

5) Bath Sport Prospectus

6) Financial Statements

7) Balance of Uses

1. Introduction

This Strategic Review has been commissioned by the Bath Recreation Ground Trust at the behest of the Charity Commission to determine the future direction of the Recreation Ground following the High Court ruling in 2002 which declared the land to be held on a charitable Trust. The terms of reference for the review are firstly to consider the future uses for the Recreation Ground including the balance of those uses and secondly to consider the management arrangements and policies appropriate for the future and in relation to existing tenancies.

The purpose of this report is to provide information to the Trustees in order that they can determine an appropriate future direction and vision for the Trust. The future management arrangements and policies necessary to achieve the future vision can only be developed once the direction of the Trust has been determined by the Trustees. For this reason policy and management issues have been restricted to the areas that the Trustees will need to consider when determining their preferences for the future of the Recreation Ground.

In order for the Trustees to determine the future uses of the Recreation Ground it is important that they have clear information on the present situation and in particular the legal complexities. It is also paramount that the parameters as laid out in the Trust's Governing document (in this case the 1956 conveyance) and by Charity Law are clearly understood particularly with regard to the Rugby Club and the Leisure Centre whose occupancy of the Trust's land in the light of the 2002 ruling is now recognised as being unwittingly in breach of trust. Likewise it is also necessary to be clear about the potential opportunities afforded by the powers vested in the Charity Commission to make changes to the governing document and the Commission's views about the circumstances in which they will consider using these powers.

During the course of the review it has become apparent through media and public engagement that there is an element of misunderstanding about the role of the Trust and the issues it faces, within the public domain. The complexity of the legal issues in particular has given rise to widespread confusion. For these reasons, this document makes no excuses for attempting to explain these detailed and complicated issues with the aim of providing absolute transparency to the many stakeholders who will be interested in this Strategic Review.

Finally the Strategic Review also requires that a business plan be developed to implement the outcomes of the review. At this stage no detailed plan has as yet been compiled however the key challenges and issues to be overcome in taking forward each option have been clearly identified. Following a decision of the Trustees an appropriate delivery and business plan can and will be developed. .

2. Executive Summary

The Recreation Ground (the Rec) is an open space in the heart of the world heritage city of Bath, England. The Rec has played an important role at the heart of the community for over a hundred years. It is possibly most well known for being the home of Bath Rugby (for more than 100 years), but it also houses Bath Leisure Centre (which was opened in 1975) and hosts a variety of sporting and non-sporting activities

The Recreation Ground was conveyed to the Corporation (Mayor Aldermen and the Citizens of the City of Bath) on the 1st February 1956. From this point on it was managed, effectively, as part of the Council's estate but with full regard to the restrictions placed upon it. In 1975 the leisure centre development only took place following confirmation from Senior Counsel that the leisure centre would be within the charitable trusts of the conveyance. However, doubts later arose over the legal effect of the conveyance and the Charity Commission advised in writing in 1992 that it did not create a charity and if application were made to register it as such their legal adviser would recommend that registration should be refused on this basisFrom then,the former Council resolved that the land should be managed"within the spirit" of the covenants in the conveyance.. The position was clarified in 2002, when the High Court declared the land to be held on a charitable trust (now registered charity no. 1094519). This confirmed that the Recreation Ground was a Trust with the Council as sole Trustee, and a Trust Board has since been established to manage the Trust's affairs.

The trusts in the 1956 conveyance are not in exclusively charitable form and have to be interpreted by reference to the Charitable Trusts (Validation) Act 1954 in order for the purposes to be legally charitable and the deed itself valid.

The Trust now finds itself in a difficult position, the roots of which are steeped in history and have developed over time.

Not surprisingly a range of differing views have emerged and remain with regard to the valid and future uses of the Rec. The most recent legal opinion is clear that the presence of a Professional Rugby Club and a leisure centre on the site of the Rec are breaches of the Trust.

However it is also clear that these breaches were made innocently and in the genuine belief that they did not cause conflict with the trusts, based on history and the prevailing legal advice.

Proposals to address the position will be complicated by the fact that the Rugby Club possesses a valid lease with 62 years remaining (which is a valuable asset) and there is no obvious site on which the leisure centre could be relocated. Nor of course have any funds been identified to facilitate the resolution of these complications. In addition both the leisure centre and the Rugby Club are seen to be extremely popular amongst the local community.

In broad terms the Charity Commission have the powers to facilitate the resolution of this situation by allowing the Trust to adopt any of the broad options identified in this report. However each of the options presents obstacles of varying magnitude, and it is for the Board to determine which of these options is most likely to bring a lasting solution which best meets the objectives of the Trust, given the history and complexities referred to above and the current circumstances.

As stated above a range of views have emerged about the most suitable way to deal with the present situation. In these circumstances it has to be recognised that any approach adopted will be more favourably received by some than others. Nevertheless the situation has to be resolved as a matter of urgency.

Going forward it would seem sensible to base the resolution of this situation on the analysis of the three main options identified in this report. Clearly there is some scope for a variety of approaches within the options

Option 1 - Reversion to minimal impact use (return the Rec to a green open space)

Option 2 - Variations to the current use (Keep the Rugby Club on the Rec and enlarge the footprint of the existing lease with the additional land needed by the club as well as keeping the leisure centre on the Rec)

Option 3 - Significant Change (Develop the whole of the Rec (including land occupied by the Rugby Club and leisure centre)

3 Background to the Strategic Review

The Recreation Ground (the Rec) is an open space in the heart of the world heritage city of Bath, England. The Rec has played an important role at the heart of the community for over a hundred years. It is possibly most well known for being the home of Bath Rugby (for more than 100 years), but it also houses Bath Leisure Centre (which was opened in 1975) and hosts a variety of sporting and non-sporting activities. A brief history of the Rec from 1894 to date is set out in a timeline shown at Appendix 1

The Recreation Ground was conveyed to the Corporation (Mayor Aldermen and the Citizens of the City of Bath) on the 1st February 1956. From this point on it was managed, effectively, as part of the Council's estate but with full regard to the restrictions placed upon it. In 1975 the leisure centre development only took place following confirmation from Senior Counsel in 1967 that the conveyance created a charitable trust and that the leisure centre would be within its terms. However, doubts later arose over the legal effect of the Conveyance were raised and the Charity Commission advised in 1992 that it was not a charity. The situation was clarified in 2002, when the High Court declared that the land was held on charitable trusts (now registered charity no. 1094519). This confirmed that the Recreation Ground was a Trust with the Council as sole Trustee, and a Trust Board has since been established to manage the Trust's affairs. The trusts in the 1956 conveyance are not in exclusively charitable form, however, and have to be interpreted by reference to the Charitable Trusts (Validation) Act 1954 in order for the purposes to be legally charitable and the deed itself valid.

Since the High Court decision in 2002 the Charity Commission has been concerned that not all of the activities on the Recreation Ground comply with the purpose of the Trust as interpreted through charity law.

The two major issues raised by the Commission were as follows. First, the legality of the leisure centre, as it does not comply strictly with the Trust's purpose which, the Commission believes, is to provide facilities for open air recreation for the public. Secondly, the use of the Recreation Ground by Bath Rugby Club is not a charitable purpose as the Club is a commercial organisation and is perceived by some to be dominant, to the detriment of wider uses and more general access..

Therefore, the Trust agreed to undertake a Strategic Review to determine the future uses of the Recreation Ground. A significant part of this process involves consultations with the beneficiaries ie the general public . (The BDOR report is attached at Appendix 2) and a financial appraisal of the options identified by Ernst and Young (Appendix 3), together with significant legal advice from Senior Counsel

4. Objectives of the Trust

The objectives describe what the legal purpose of charity is. These are contained in the conveyance of 1st February 1956, which says:

"The use with or without charge of the whole or any part or parts of the property hereby conveyed for the purpose of or in connection with games and sports of all kinds tournaments, fetes, shows, exhibitions, displays, amusements, entertainments or other activities of a like character and for no other purpose and shall maintain equip or lay out the same for or in connection with the purposes aforesaid as they shall think fit but so nevertheless that the corporation shall not use the property hereby conveyed otherwise than as an open space and shall so manage let or allow the use of the same for the purposes aforesaid as shall secure its use principally for or in connection with the carrying on of games and sports of all kinds and shall not show any undue preference to or in favour of any particular game or sport or any particular person club body or organisation."

5. Trust Board

The Council itself is in effect the Trustee but discharges its responsibilities through a Trust Board for the Recreation Ground. Appointments to the Board are determined by the Council via the managing Executive Cabinet and following the Council elections in May 2007 the Board currently comprises the following members;

Councillor David Hawkins

Councillor Vic Pritchard

Councillor Chris Watt

The main functions of the Board are to take policy decisions and issue appropriate guidance for the day to day operation of the Charity. The Board has to operate within the objects set out in the governing document (the conveyance) and the legal framework applicable to Charitable Trusts i.e. Charity Law and clearly any other laws relevant to issues affecting the Charity.. .

6. Current usage

The objects of the Trust provide for

games and sports of all kinds tournaments fetes shows exhibitions displays amusements entertainments or other activities of a like character and for no other purpose

to take place on the Recreation Ground and requires that the Board

shall maintain equip or lay out the same for or in connection with the purposes aforesaid

By implication this means that there should be a mix and variety of activities taking place on the Rec and implies that suitable facilities should be provided to enable such. However, the literal terms of the Trust have to be read in line with the Charitable Trusts (Validation) Act 1954, which confines them to those purposes which are exclusively charitable in law. These do not include professional or spectator sports.

The existing uses have grown up historically but by default have created a mixed use facility. Certain areas of the site are occupied at certain times of the year by particular recreational activities and sports, e.g. rugby, tennis, croquet, drama and cricket during the Cricket Festival.

Notwithstanding the position of the various occupants the concern of the Trustees must be in ensuring the balance of uses is reasonable and reflects the needs of beneficiaries. Secondly in determining appropriate uses regard must be had to the financial implications inherent in such uses.

The key issues of possible breach for the Trust to resolve concerning the Rugby Club and Leisure Centre are dealt with at length in specific chapters within this report. There are a number of other users and leaseholders whose presence helps to achieve a balance of uses required by the Trust. Details of other users are contained with appendix 6. The status of these users need not be materially affected by the options under consideration within this Strategic Review

The following table summarises the current occupancy position

Use

Area

% of total recreation ground

Rugby Club - main lease

15,541

25%

Rugby Club - east stand

1,042

2%

Leisure Centre

10,778

17%

Tennis Clubs

2,956

5%

Croquet Club

5,634

9%

Drama Club

436

1%

Open Space

25,657

41%

Total Area

62,044

100%

Bath Drama Club

Bath Drama Club leases an area of land plus a building on the Recreation Ground - access from Vane Street. The lease is dated 24th December 2001 and is for 5 years from 22nd July 2000 at a rent of £1,600 per annum. They are currently holding over on this lease pending the outcome of the Strategic Review

Bath Croquet Club

Bath Croquet Club first took a lease in November 1996. It leases an area of land at the eastern end of the Recreation Ground which includes four croquet lawns and some wooden sheds, and an area for car parking. The lease is ten years from November 2001 at a rent of £2,500 per annum. The croquet season runs from mid April to mid October.

Tennis

There are five tennis courts situated on the Rec. The Tennis season runs from late April to late September. Two tennis courts are used by the Southdown Tennis Club for two days a week. This has reduced significantly from 2004 when they were used seven days a week, due to diminishing membership. Southdown now only have 13 members. The Spa Tennis club uses the remaining three courts and has approximately 30 members. The two tennis clubs contribute £1650 and £350 per season on annual hire agreements.

Both the Drama club and Croquet club have exclusive possession of the sites they occupy within the terms of the leases. The Tennis Clubs also have exclusive possession but are required to make the courts available at certain times for casual use.

With regard to the Drama and Croquet Clubs the exclusivity of usage could only be varied by mutual agreement. However in respect of the Tennis clubs it should be possible to change existing arrangements and enable far greater public access.

Other Users

A wide variety of other activities take place on the Recreation Ground during the spring to autumn period. Some of these events also require exclusive possession usually for operational management reasons where public access is not open except on an admissions basis. Details of some of these other events is included in appendix 7. It should be noted that Somerset County Cricket have indicated they will no longer be playing matches on the Rec due to the expense of arranging and operating the event.

Car Parking

Car Parking is theoretically only permitted on the Rec in association with recreational usage. The Trust has no powers to operate a public car park. A permit system is in place for leaseholders and tenants but it is difficult to police the Leisure Centre car park in the same way, where use of the leisure centre facilities will be a mix of regular and casual users. A review of parking arrangements would seem in order to ensure that it is equitable and, proportionate to usage.

Land management

All casual bookings and hires are managed by the Council on behalf of the Trust as is grounds maintenance. The intensity of open space ground use has limitations particularly to the open space area where the drainage is inefficient and liable to occasional flooding. It is not envisaged grounds maintenance costs would significantly increase if the all the recreation ground were opened up completely as green space. However an increase in intensity of usage would required improvements to drainage and more intensive maintenance particularly for reinstatement of damaged areas, administrative costs would also increase.

Seasons

During the winter months and until May Rugby is the main sporting activity as you would expect. Lacrosse is also a regular activity and the Bath half marathon also features in March.

During the spring and summer months more community based events take place including the Bath fringe Spiegel tent, Somerset County Cricket Festival, Marching Bands competition, Bath rugby summer Camp, Forever Friends concerts, and lacrosse tournaments. The Whitfield Volleyball Tournament is a long standing fixture which brings in high numbers of people who also camp on the Rec during the Tournament. These concentrate in the period to mid September and for the most part are longstanding annual events. Notably apart from rugby the next key calendar date to the end of the year is the Round Table firework display.

For the great part the Recreation ground as an open space naturally sees greater usage and demand for events during the spring and summer months, where a significant amount of effort is incurred administratively to ensure all are catered for. There is no evidence of unsatisfied demand from users indeed there is some unused capacity within the open space element.

Get Active Vision

The Councils vision for sport and activity `Get Active' embraces a number of key themes particularly relevant to the Trust with a range of objectives to be achieved by 2010.

Key theme 1 Developing community sport

Key theme 2 Increasing PE and School sport

Key theme 3 Inclusion

Key theme 4 Improving Health through physical activity

Key theme 5 Fit for purpose facilities

Key theme 6 Encouraging sport and tourism

There are an estimated 200 voluntary sports clubs in Bath and North East Somerset with varying facilities and focuses. The Vision is aimed at building partnership to both encourage participation and maximise the use of sporting resources available for the community as a whole not just at a local level but regionally.

A key objective of key theme 5 is to work with the Trustees to develop a management plan for the facilities and the contribution of Bath Rugby. A key objective of theme 6 is to establish a major events strategy working closely at regional and local level and with tourism partners.

It is apparent that the Trust can play an important role in supporting this vision and in developing a management plan for the site.

Policies

The significant policy approved by the Trust in February 2005 relates to lettings. This determines the charges to be levied depending on usage requirements and types of organisation. By design the policy recognises the charitable nature of facilities and this is reflected in the moderate level of charges levied.

In view of the extent of dependency on income from the Rugby club and the relative subsidy to other users the lettings policy should be reviewed. It is suggested that this is best undertaken in conjunction with the Councils Sports & Active Leisure Team

7 Financial position

The Trust must account for all incomes and expenditure separately and report the annual accounts to the Trust Board and submit these financial statements to the Charity Commission by 31st January each year.

The accounts for the year ending 31 March 2006 show a small surplus of A37586 derived from income of A3101,430 (including A386,847 received from Bath Rugby Club) and expenditure of A393,844 (including A348,849 spent on grounds maintenance.

In normal operating circumstances and with the Council subsidising the Leisure centre the Trust breaks even and sometimes makes a small profit. However the extraordinary costs detailed below have accumulated into a substantial deficit for the Trust meaning that any profits the Trust does make annually are not available for reinvestment in charitable activity but simply reduce the deficit.

Car Park Income

The accounts submitted since August 2002 excludes the costs and incomes relating to the leisure centre and its associated car park. The Charity Commission appear to have come to the view that the income generated by the car park is the property of the Trust and the deficit incurred through the operation of a public leisure centre is a liability of the Council. Senior Counsel has expressed a different opinion, in effect viewing both as Trust Assets- the detail of which is dealt with in section 12. Suffice to say that this advice has no immediate impact on the Trusts finances but could in fact be financially detrimental to the Trust should the Council discontinue its subsidy of the leisure centre operation at some future date. .

Financial impact of activities

The table below illustrates the relative costs and incomes associated with the range of activities which take place on the Rec. 2005/06 estimated figures have been used for illustrative purposes and depending on usage these figures may vary marginally from year to year. However it provides a clear indication of the level of subsidy provided by an anchor tenant in this case the Rugby Club to enable the range of other activities to take place at less than operational cost

 

Rugby

Cricket

Croquet

Tennis

Lacrosse

Volleyball

Football

General

Cost

20,600

14,263

11,184

6,395

2,594

544

1,746

36,518

Income:

               

Leases

82,858

 

2,769

       

1,600

Hire Charges

 

3,861

 

2,031

918

1,500

243

8,572

Surplus (deficit)

62,258

(10,402)

(8,415)

(4,364)

(1,631)

956

(1,503)

(26,346)

It should be noted that there are service level agreements in place between the Council and the Trust governing charges for services. Outside the Service Level Agreements there are a range of latent services provided to the Trust by various council departments which whilst small individually, by volume may be substantial as a proportion of the Trust's turnover. These arise particularly in the organisation and management of events, the many ad hoc enquiries and correspondence relating to the Trust and the range of issues arising from environmental to traffic management concerns. No attempt has been made to quantify this latent benefit - suffice to say that such a hidden subsidy exists.

Extraordinary costs

Receiver - Manager

The Receiver-Manager appointed by the Charity Commission has levied A3136,804 in fees and charges against income collected on behalf of the Trust. This sum represents the final accounts for the Receiver-Manager's who have now been fully discharged by the Charity Commission. It should be highlighted at this point that the Charity Commission's wide-ranging powers enable them to make such appointments without reference to the Trustees or the potential impact on the Trust's Finances.

Strategic Review

Due to the Trust's difficult financial position the costs of the Strategic Review have been financed by loans from the Council. This is dealt with in a separate Report to the Trust Board. The total costs of delivering the Review are approximately A3135,000 (includes A397,428 in 2006/07). It is expected that in taking forward any decision from this Review further costs will be incurred by the Trust. Additional Finance may need to be sought from the Council in the future

Asset Condition

During 2007 it has become necessary to request further funding from the Council to repair the Rec's Turnstiles which are historic listed monuments. The estimated cost of repairs is A362,000. Further evaluation of the condition of Trusts assets, excluding those where maintenance liabilities rests with the tenant, reveal further repairs necessary in the order of A338,000 primarily to the Cricket Pavilion. These repairs are not imminently required but the Trust will need to reflect on the timing of such repairs and their funding following a decision on the Rec's strategic direction and these should be taken into account in developing the future business plan.

Future Financial Position

Moving forward into 2007/08 the Trust faces a significant loss of income if approval for the Rugby Club temporary stand is not forthcoming from the Charity Commission. The loss of the Cricket festival also reduces income levels but some costs will also be reduced. Debt charges in the order of A325,000 will be payable from 2008/09 (arising from the Council loans) and perhaps more depending on the implementation of the Strategic Review outcomes. Given this position the Trust will be operating at an annual deficit of approximately A387,000 by 2008/09. Any decisions taken with regard to future uses of the Rec must seek to alleviate the operational deficit

Full details of the Trusts Accounts since the High Court decision of 2002 are contained in appendix 6

8. Role of the Charity Commission and their involvement with the Trust

The Charity Commission have a responsibility to uphold charity law and ensure it is followed. This means that they can scrutinise any decision made by the Trust and if necessary intervene if a decision has not been made in the best interests of the Trust or outside the Trust's stated purpose.

Following the High Court ruling in 2002 the Charity Commission appointed two members of the firm Baker Tilly as Receiver and Manager of the Charity (by an order under section 18 Charities Act 1993).

The appointment of Baker Tilly gave them control of the Charity. This included the following functions (but not including the day-to-day management of the Rec):

Review the historical circumstances regarding how Bath City Council had occupied the charity property at the southern end of the Rec and formed a sports centre and car park. Plus, consider any claims against the Council or others which may have been connected.

Consider what was in the best interests for the future of the sports centre and car park. This meant examining the options for either retaining, disposing or part disposing of the facilities.

After reviewing these options, they were asked to decide what course of action was in the best interests of the Charity and then take the next steps to execute that action (subject to direction from the Charity Commission).

They were also asked to:

Review the validity of the Charity's leases to its tenants and the terms of the tenants' occupation (including rent).

Decide what action to take in relation to the tenants, in accordance with the Trustees of the Charity and considering the best interests of the Charity.

Having decided on what was in the Charity's best interests, they then had to take next steps necessary to execute that decision, subject to direction from the Charity Commission.

Finally, they had to report their findings (in confidential documents) to the Charity Commission, plus, any other areas of concern that came to their attention.

In April 2005, their role was reduced with regard to the leases, nevertheless, they still remained Receiver and Manager of the Charity in relation to the sports centre and car park.

Theye were finally discharged by Order on ?.It is not known what the outcome of their review was,albeit it is known the recommended a sale of the Leisure Centre to the Council which did not proceed as a result of the decision of the Commission.

Separately from the position of the Receiver/manager ,a further order issued on 30th March 2006 required the Trustees to obtain approval from the Charity Commission in connection with any of the following;

letting, agreeing to let, selling, or otherwise disposing of, or creating any legal or equitable interest in, all or any of the property of the Charity.

granting any licence of any kind in respect of all or any of the Charity's property in favour of, or for the benefit of, Bath Rugby Club.

This order reinforced the legal position with regard to any disposals of land - i.e. it provides that the Trustees cannot extend the annual tenancy agreement with the Rugby Club for the erection of a temporary stand on the Eastern side of the Rugby pitch without the permission of the Charity Commission. With regard to the expiry of the existing temporary stand lease in May 2007, the Commission, have stated (in a letter dated 27 April 2007) that they will not consider the request for approval to extend the lease for another year until they know what decision the Trust Board has reached about the future use of the Rec - i.e. not until they have considered this report.

.

9. Legal considerations

The Trustees in considering the future direction for the Recreation Ground have a number of relevant factors to address.

The primary relevant consideration, in the light of the judgment of 2002, is that the land which was conveyed to the Council was held on valid charitable trusts. The exact purposes are not as literally stated in the conveyance however as it is only charitable because of the operation of the Charitable Trusts (Validation) Act 1954, which cuts out anything non-charitable. Any use that is made of the land, therefore, must either be in accordance with those charitable trusts, or in accordance with the charitable trusts as modified by Scheme if and in so far as it is necessary to alter them to enable the charity to function effectively.

The Rugby Club and Leisure Centre unwittingly fall foul of the Trust purposes in a number of ways.

Charities: Key Principles and Definitions

The Recreation Ground as an Unincorporated Charitable Trust is governed by its objects i.e. its purpose. These are contained in the Trust' governing document in this case the 1956 conveyance. This means that the Trustees have to operate within certain conditions conferred on them by Charity Law and by the Trusts Objects themselves.

To understand this more clearly it is worth examining the key principles of Charities and the particular aspects affecting the Recreation Ground Trust itself.

Charitable Purpose

In law, the concept of "charitable" purpose has a technical meaning which is not quite the same as the way that the word is used in normal language. In common law jurisdictions, the concept derives loosely from the meandering list of charitable purposes in the Charitable Uses Act (also know as the Statute of Elizabeth) 1601, interpreted and expanded in a considerable body of case law. In Commissioners for Special Purposes of Income Tax v Pemsel (1891), Lord McNaughten identified four heads of charity: (1) relief of poverty, (2) the advancement of education, (3) the advancement of religion, and (4) other purposes considered beneficial to the community.

Although the courts still refer to the Pemsel classification, they have long recognised that what is accepted as a charitable purpose must change to reflect current social and economic circumstances. So a purpose will be charitable not only if it is within the list in Pemsel but also if it is analogous to any purpose either within it or since held to be charitable. Nowadays many charities are set up for purposes that are not mentioned in the classification.

In this way charitable purposes have been extended and developed, by decisions of the courts and of the Charity Commissioners, so that the development of the law has reflected changes in social and economic circumstances.

Charitable Trust

A charitable trust is a trust established for charitable purposes only. Charities may take the form of charitable trusts, companies or unincorporated associations.

In general the same rules of trust law apply to charitable and non-charitable trusts. However some special rules apply only to charitable trusts. At common law the most important of these special rules for charities, are as follows:

1. Charitable trusts are exempt from the rule against perpetuities, which (in short) would otherwise require a trust to come to an end after a certain period. Charitable trusts may continue indefinitely;

2. charitable trusts come under the doctrine of cy pres, under which (in short) if the charitable purposes of the trust cannot be fulfilled, then they can be replaced by new and more appropriate charitable purposes;

3. charitable trusts are formed for charitable purposes; normally trusts must be for the benefit of a beneficiary or a class of beneficiaries, and non-charitable purpose trusts are normally (outside of specific exceptions) void; and

4. charitable trusts do not fail if their objects are insufficiently certain.

Cy Pres

The Cy-près doctrine allows the Court to amend the terms of a charitable trust as near as possible to the original intention of the testator or settlor, where the original intended purpose is impossible, impracticable or illegal. This prevents the trust from failing.

Charity and benefit of the community

Any charity needs to meet two fundamental criteria. First its purposes must be exclusively and legally charitable. Secondly, all charities must also be for the benefit of the community or an appreciably important section of the community. In other words charity should have a public character.

The meaning of "benefit"

A charity must provide a recognisable advantage for people at a level which reflects their needs. "Benefit" in this context means the net benefit to the public. It is not simply a question of showing that some benefit may result. For example, it may be that the achievement of a given aim would provide some degree of benefit, but would for other reasons cause greater harm so on balance it would be to the public disadvantage. If the harm outweighs the benefits, the purpose would not be charitable.

Benefit is assessed in the light of modern conditions

The courts develop charity law to take into account modern needs and circumstances. This means that perceptions of public benefit can change over time, and those changes are influenced (among other things) by social and economic conditions, by increasing knowledge and understanding and by changes in social values.

Purposes that may not have been regarded as beneficial years ago may, in the light of changing circumstances, be regarded as beneficial now, and vice versa.

For example, in recent years the Commission has recognised the promotion of urban and rural regeneration, the promotion of community capacity building, the promotion of equality and diversity, conservation of the environment and the promotion of sustainable development as charitable purposes in the light of modern circumstances.

Charities should benefit people

The law presumes that the public will benefit from purposes that are for the relief of poverty, the advancement of education or the advancement of religion. That can be challenged in individual cases. This will be changed under the Charities Act 2006, which requires all charities to be able to prove benefit to the public. In the case of recreational charities and other charities for purposes other than the three purposes mentioned above it has always been necessary to show that the purpose will indeed be for the benefit of the public. In all cases the Commission must take a view on the evidence before it.

The meaning of "the public"

Having a public character means that benefits must be provided to the public at large or at least a sufficient section of the community. This is not a simple matter of numbers. What is "sufficient" will vary from case to case depending on the organisation's purposes.

The public character of charity is upheld by ensuring that an organisation benefits either the public as a whole, or a sufficient section of it. Whether this is the case can only be decided on a case by case basis.

Charging and Public Benefit

Generally speaking, charities may charge their users for access to their services and facilities and indeed many do. A charity may charge fees which more than cover the cost of the services or facilities it provides. This is acceptable provided that the charges are reasonably and necessarily applied in furtherance of the charity's purposes, for example in maintaining or developing the service being provided.

However, charges should not be so high that they effectively exclude the less well off and affect public benefit. A key consideration is whether the level at which fees are set have the effect of preventing or deterring the less well off from accessing the services or facilities.

Charities therefore need to consider how the less well off may otherwise access those services. This is likely to vary from charity to charity and for different charitable purposes but may include considering:

A7 The provision of concessions, subsidised or free places ;

A7 The existence of accessible insurance or other benefit schemes

A7 The provision of wider access to charitable facilities or services. For example some charities may provide additional facilities or services for the less well off people who would otherwise be excluded. Some charities may lend equipment or staff out to other charities or groups which provide the same facilities or services to the less well off..

A7 What is the nature and extent of the benefit provided? This may include considering how far the type of service or facility provided is one for which there is a public need, and how far the service or facility provided in the particular case contributes towards meeting that need.

Charges therefore need to be reasonable and reflect the furtherance of the charities objects

To what extent may individuals benefit privately?

Any benefit to an individual must either:

A7 arise directly through pursuit of the charity's objects or

A7 be a legitimate incidental to the pursuit of the charity's objects.

This legitimate incidental can be part of the way the charity legitimately carries out its objects (eg appropriate salaries for its staff). Alternatively it can arise as a result or consequence of properly carrying out the charity's objects (for example limited profit to businesses as a result of urban regeneration projects). What matters is whether the individuals' benefits strike at the public character of the charity.

In general, a private benefit is legitimately incidental if:

A7 it arises as a necessary, but secondary, consequence of a decision by the trustees; and

A7 that decision is directed only at furthering the organisation's charitable purposes (as opposed to a separate purpose of in effect providing private benefit); and

An individual can benefit privately from a charity only where that benefit arises directly through, and/or is legitimately incidental to, the pursuit of the charity's objects.

It is not always easy to tell what is 93legitimately incidental94 to the pursuit of the charity's objects. This is a matter which has to be considered in the individual circumstances of each case. However, the following factors may be relevant.

The benefit should come about either in the direct delivery of some reasonable and appropriate benefit to a properly chosen beneficiary or in, or as a result of, an action by charity trustees directed to some main charitable aim. Objectively viewed, it should not be an independent benefit.

The action of the charity trustees giving rise to the benefit (and the course of action of which it is a part) should be one which furthers the charitable object. The purpose should not be to promote some collateral object.

The benefit should be a necessary or integral part of a course of action which is determined by the trustees to be an effective and efficient way of furthering the charity's purposes, or it should result from such a course of action.

It should be desirable for the benefit to be conferred. The line of action or strategy, of which it is a necessary part or consequence, should be justifiable in terms of the duty of charity trustees to act solely in the interests of their charity.

The amount of benefit should be reasonable, given its purpose.

Disposal of Charity Land

In this context disposal means the granting of any right including lease or tenancy as well as sale

If the trusts of a charity do not permit the disposal of its land, but the trustees wish to do so, they can rely on the powers contained in Section 6(1) of the Trusts of Land and Appointment of Trustees Act 1996. That section gives trustees all the powers of an absolute owner which, of course, includes a power of sale. If the governing document requires that the land be used for a specific purpose (eg as a recreation ground) the trustees should use the proceeds of any sale to purchase land to be used for a similar purpose.

If the land forms part of the permanent endowment of the charity then the proceeds of sale will also be permanent endowment and cannot normally be applied without an Order from the Commission. The two exceptions to this are:

A7 where it is proposed to purchase replacement property to be used for the purposes of the charity; or

A7 where the land sold was used to produce an investment income in which case the proceeds can normally be used to purchase investments designed to generate income. The investments would however be permanent endowment and must be retained

This is another area where the 2006 Act will change the law. It will be possible in some cases to render permanent endowment expendable.

There are additional rules concerning the disposal of any land which is required under the charity's trusts to be used by the charity for the purposes or a particular purpose of the charity, for example as a recreation ground or as an almshouse. These rules are set out in sections 36(6) to (8) of the 1993 Act.

Land held by a charity for specific purposes

`Specie property' is land settled on specific charitable trusts. It is land or buildings held by the charity and required to be used for a particular purpose of the charity. This is different from `functional property', which is used by the charity to further its charitable objects but is not required to be used in this way by the trusts of the charity.

Specie land is subject to the requirements of s.36(6) but functional land is not. If there is any doubt as to whether the land is specie or functional land, the case should be referred for legal advice

It is considered that trustees have an implied power to dispose of specie land if they replace it with property just as suitable for the purposes of the charity. If they do wish to dispose of specie land without replacement, that will often be incompatible with the existing purposes of the charity. In some cases, however, the governing document will contain provisions relating to the disposal of the specie property - model deeds for village halls, for example, often contain such provisions. In other cases a power of amendment might be used to alter the purposes of the charity so that the disposal is not incompatible with them.

If a disposal of specie land is not with a view to replacement but will not alter the purposes of the charity (eg the grant of an easement over the land) then authority for the disposal of specie land can normally be given under section 26 of the 1993 Act, unless there is an "express prohibition" in the trusts of the charity

If the disposal will interfere with the purposes of the charity (eg if the whole of the land belonging to the charity is to be sold without equivalent replacement) then a Scheme will have to be made, and there will have to be a cy-pres occasion as set out in section 13(1) of the 1993 Act.

In either case if a suitable constitutional power of amendment is available, that may be used to provide the power instead of obtaining a Scheme or Order.

Whether or not trustees are able to proceed with a disposal of specie land without a Scheme or Order, they must comply with the requirements of s.36 (6), unless those requirements are disapplied under sub-sections (7) or (8).

Charities and Insolvency

Unincorporated charities are not "legal persons" and cannot technically incur liabilities, which are instead incurred by their trustees, acting on their behalf. Unincorporated charities cannot, therefore, technically become insolvent. However, a charity may reach the financial state where the value of the assets in the trust which are available to the trustees to settle their liabilities (see below) are insufficient.

As long as the decision to incur a liability on behalf of the charity was properly made (eg at a meeting of which full notice had been given to all of the trustees), then each and every trustee shares responsibility for that liability, unless the terms of the agreement incurring the liability specify otherwise.

Trustees normally have a right of recourse to the trust assets for reimbursement of liabilities properly incurred. In most circumstances both the responsibility and the right of recourse remain even after an individual has retired as a trustee The concern for trustees is that, unless the debts and liabilities have been incurred on the basis that they will only have to be met if there are sufficient funds in the trust to do so, the trustees may have to meet the debts and liabilities personally if there are in fact insufficient funds in the trust.

Where a liability has been properly incurred by the trustees of an unincorporated charity, but the charity does not have sufficient assets to meet the liability, those trustees may have to meet the shortfall personally. How this deficit is to be shared between the trustees can depend on the terms of the agreement which gave rise to the liability, but normally the creditor will be able to sue any of the trustees for the whole liability. A trustee who has to pay more than his or her share may claim a fair contribution from the other trustees. This means in effect that any deficit will be shared equally between those of the trustees who can be found, and who have the means to pay, unless they agree otherwise among themselves.

Although unincorporated charities cannot be compulsorily wound up their trustees may face similar legal demands from creditors in relation to liabilities that they have incurred on behalf of the charity.

For an unincorporated charity no statutory insolvency proceedings exist. It will be up to the charity trustees to carry out the orderly winding up of the charity, taking appropriate professional advice as necessary. All assets and liabilities must be identified. Any assets left over after distribution to meet the proper claims of creditors must be applied by the trustees in accordance with the dissolution provision in the governing document of the charity. If there is no such dissolution provision they should seek our advice.

Local Authority as Trustee?

The administration of a charity by a local authority can have advantages: as a body corporate, a local authority enjoys perpetual succession, so that it is not necessary to make individual appointments of charity trustees or to vest the charity's property in them. This means that in the case of insolvency liability ultimately rests with the Local Authority;

Often the local authority will be willing to subsidise the operation of the charity out of its statutory funds, either directly by way of grant aid, or indirectly, for example, by meeting the cost of maintaining the charity's property or by providing professional services free of charge. However a Local Authority is not obliged to financially support a Charity for which it is trustee simply because it is a Local Authority. It is necessary to consider the terms of the original gift.

Can a local authority make bye-laws for recreation grounds?

Where a local authority:

A7 is the trustee or custodian trustee of; or

A7 has given money to; or

A7 has supplied goods or services, such as grass cutting to

a charitable recreation ground or open space, the authority may have power to make enforceable bye-laws for the land. This can be very helpful to a charity, since they may allow fines to be imposed or for an official of the local authority or the police to remove anyone who ignores those bye-laws. The trusts of the charity may also contain a power to make bye-laws, but these are generally not enforceable in the same ways and are, therefore, much less useful.

Bye-laws made by a local authority in respect of land held on charitable trusts to which the provisions of the Open Spaces Act 1906 and the Public Health Act 1875 apply, require confirmation by the Home Office to be effective. The conveyance of the land or the governing document of the charity will usually indicate whether either of these Acts applies.

Powers of the Charity Commission to make changes

A charity's governing document sets out its trusts - that is, what its purposes are and, usually, how it is to be run. These trusts will normally be sufficient for trustees to run their charities well for many years. However, when they become outdated or inadequate, the trustees will need to change them.

In many cases the trustees will have the necessary powers to make these changes themselves. Where they do not, the Commission can confer (by an Order under section 26 of the 1993 Act) a power on the trustees to amend their administrative provisions, or provide additional powers not currently available in the governing document.

The Commission also has the power to change a charity's charitable purposes directly by a cy pres Scheme.

What is an Order?

A section 26 Order is a legal document made by the Commission which has the effect of conferring new powers on trustees. The authority this Order provides can only be discretionary: trustees must be able to choose whether or not to exercise the authority granted by the Order. But we can impose mandatory conditions which must be followed if the power is exercised.

When is an Order appropriate?

Where a change to the administrative powers is needed and the trustees are not able to make the changes themselves the commission will always aim to give the Trust a power to make the changes by making an Order, unless the changes which the charity needs go beyond the scope of the charity Commissions power

An Order will normally be sufficient in the following specific cases if the trustees make a case for us to:

A7 confer on the trustees a power of amendment, subject to certain limitations;

A7 provide additional powers not currently available in the governing document;

A7 authorise the trustees of a charity to transfer its undertaking to another charity, provided that this does not involve any alteration to the purposes of the transferor charity;

A7 give the trustees power to add or amend specific administrative provisions in the charity's governing document;

A7 provide a power to spend capital on terms of replacement;

A7 authorise a payment as being expedient in the interests of the charity; or

A7 confer a power to adopt a total return policy on investments

What is a Scheme?

10. A Scheme is a legal document made by the Commission, normally under section 16 of the 1993 Act, and can be used to change almost any aspect of a charity's purposes or administrative provisions. In practice, the Commission will only make a cy pres Scheme (i.e. changing the charity's purposes) or to make other constitutional arrangements which go beyond the scope of the Commission's Order-making powers when a sufficient case has been made for this by the trustees.

How does a Scheme differ from an Order?

There are a number of key differences. For example, a Scheme directly changes the constitution of a charity; an Order simply confers a power on trustees to do something. The scope of Scheme-making powers is wider than the scope of Order-making powers. Typically, a Scheme will be appropriate where:

A7 the governing document needs completely replacing;

A7 the purposes of the charity need changing;

A7 other changes are required which the governing document or an Act of Parliament expressly prohibit;

A7 charities wish to merge and the effect would be to change their purposes or allow something which the constitutional arrangements or an Act of Parliament expressly prohibit.

In addition, the Commission would not make an Order where the changes are sensitive or controversial.

A Scheme can only be made after a valid application has been made and, unless the Commission dispenses with the requirement, after a period of public notice. Once the Commission has made the Scheme, there is a further period of public notice and the opportunity to appeal to the High Court against the Scheme. An Order, on the other hand, can be made without formal application or any publicity.

What are the limits on the Commission's powers to change the purposes of the charity by cy pres Scheme?

Powers to change the purposes of a charity are limited to the circumstances defined at section 13 of the 1993 Act. Broadly, these are when there has been a "failure" of some sort in the purposes, for example, where they:

A7 can no longer be carried out in the way laid down in the governing document (for example, if the people to benefit from the charity are defined by reference to a class of person which has ceased to be suitable, or if the charity provides a service which is no longer required);

A7 may have been adequately provided for in other ways (perhaps if provision is now adequately made out of public funds); or

A7 may have stopped being a useful way of using the property of the charity (such as where the income of the charity is to be applied by the payments of very small gifts).

The Commission's policy on including a power of amendment

If trustees require a change to the charity's governing document, the Commission will consider with the trustees whether they could introduce the change themselves, e.g. if the Commission provides them with a power of amendment.

If an Order or a Scheme is needed, it will usually include a power for the trustees to amend certain provisions in the governing document in the future, without needing a further Order or Scheme from the Commission.

Restrictions on using the power of amendment

Some changes cannot be made by using the power of amendment, whether this has been provided by an Order or by Scheme. In addition some changes the trustees might wish to make in the future will need the Commission's written approval if they want to use the power of amendment conferred by Order or Scheme.

The following provisions apply both to a power of amendment made by a s.26 Order and a power of amendment made by Scheme:

The trustees must not make any amendment which would have the effect of:

altering or extending the charity' s purposes (a further Scheme would be needed in such cases);

authorising the transfer of the charity's property to another charity if that would have the effect of altering or extending the purposes of the first-mentioned charity (again, a Scheme would be necessary);

making the charity cease to be a charity at law. (This prevents the trustees from carrying out, for example, any inappropriate trading or political activities);

altering the power of amendment6.2 Additional restrictions on the power of amendment granted by Order The following additional restrictions apply where the power of amendment is made by a s.26 Order:

The trustees must not make any amendment which would:

cut across an express prohibition in an Act of Parliament or in the trusts of the charity;

authorise the transfer of the charity's property to another charity if that would have the effect of cutting across an express prohibition in an Act of Parliament or in the trusts of the transferring charity.

Who decides what an Order or Scheme shall contain?

The Commission is responsible for making the Order or Scheme and for its content. In the case of a Scheme this will be agreed in broad outline with the charity trustees before an application for a Scheme is invited and the provisions may be modified in correspondence when a draft Scheme has been prepared.

10. High Court Judgment & subsequent legal advice

Historical Background & Judgment

In order to understand the present issues faced by Bath Recreation Ground Trust it is necessary to examine briefly the historic chronology and the determination of Mr Justice Hart in 2002.

In 1894 the Bath and Recreation Ground Company was incorporated to lease a field, the Recreation Ground from Captain Forester. The object was to develop it 93in such a way as to render it suitable for County cricket Matches, Lawn Tennis tournaments, Football matches and other sports94 the quotation being from the then prospectus. This lease was further extended in 1908.

The Recreation Ground Company acquired title to the Recreation Ground and other land in a conveyance of 6 April 1922. However this conveyance contained further conditions which it seems were necessary as Captain Forester owned further adjoining land.

These conditions stated that 93 no workshops, warehouses, factories or other buildings for the purpose of any trade or business which may be or grow to be a nuisance annoyance or disturbance or otherwise prejudicially affect the adjoining premises or neighbourhood shall at any time hereafter be erected upon the said hereditaments or premises except the part thereof now in the occupation of Bath Artcraft Limited (skating rink) and that nothing shall be hereafter erected placed built or done upon the said hereditaments and premises including such part thereof as last aforesaid which may grow to be a nuisance, annoyance, disturbance or otherwise prejudicially affect the adjoining premises or neighbourhood provided always that no factory chimney shall be erected on the portion of the said hereditaments now in occupation94.

The conditions laid down by Captain Forester did not impact on further lease agreements being made with new and existing users:

In 1927 a new lease granted to Bath FC for land on the West of the Recreation Ground, together with a Grand Stand, a new (North) Stand and a Pavilion, for a term of 25 years.

The Bath Artcraft land was conveyed to the Recreation Ground Company on 27th March 1930

In 1933 a new West Stand erected (in place of the Grand Stand) on the land used by Bath FC. Furthermore, the 1927 lease was surrendered and new lease granted for a further 50 years.

In 1954 an agreement to erect a building called "the Club Room" to the West of the North Stand on the land used by Bath FC. A lease was also granted to James Colmer Limited for land in the North East corner of the Recreation Ground together with a Pavilion to be used for the purposes of a tennis club.

On 1st February 1956 the Recreation Ground was conveyed to Bath Corporation the predecessor of Bath and North East Somerset Council. The Corporation paid A311,155 for the land but the conveyance was subject to a number of conditions

93to manage let or allow the use with or without charge of the whole or any parts of the property hereby conveyed for the purpose of or in connection with games and sports of all kinds tournaments fetes shows exhibitions displays amusements entertainments or other activities of a like character and for no other purpose and shall maintain equip or lay out the same for or in connection with the purposes aforesaid as they shall think fit but so nevertheless that the Corporation shall not use the property hereby conveyed otherwise than as an open space and shall so manage let or allow the use of the property for the purpose aforesaid as shall secure its use principally in connection with the carrying on of games and sports of all kinds and shall not show any undue preference to or in favour of any particular game or sport or any particular person club body or organisation94

(As explained above, the interpretation of these purposes is subject to the Charitable Trusts (Validation) Act 1954.)

A further condition was 93that the Corporation will observe and perform the covenants and conditions contained in the said conveyance to the Company dated 6th April 1922 so far as the same are still subsisting and capable of being enforced and will indemnify the Company and their assigns against any breach or non observance thereof so far as aforesaid.

In 1967 the Council sought legal advice as to whether the building of a Leisure Centre would be in breach of the `open space' term of the conveyance. Counsel Mr W S Wigglesworth interpreted the dominant purpose of the 1956 conveyance as the `provision of a ground for the recreation of the public' and as having much broader meaning which extends to the provision of indoor as well as outdoor facilities. His view was that the conveyance created a charitable trust. He said that the building of a Leisure Centre would not breach the charitable trust as there were already buildings on the site at the time of the conveyance. The Leisure Centre was therefore built by Bath City Council and opened in 1975.

In 1992 the Council entered into correspondence with the Charity Commission with a view to registering the charity. The Commission's legal officer advised that the conveyance did not create a charitable trust. During the same year the Rugby Club sought to renegotiate the terms of their present lease to allow the construction of a new south stand and carry out other improvements and also transfer all maintenance obligations to the Rugby Club.

BATH AND NORTH EAST SOMERSET COUNCIL v. H.M. ATTORNEY GENERAL/THE TREASURY SOLICITOR (BONA VACANTIA) [2002] EWCA 1623 (Ch).

Proposals by Bath Rugby Club to redevelop the site in 2000 brought matters to a head.. The Council wanted to resolve the question of whether Bath Recreation Ground (93the land94) was vested in it for the purposes of its statutory functions, or whether it was held by the Council as the trustee of a charitable trust. It was decided to seek a declaration of the High Court. The Attorney General because of his role as protector of charities had to seek to establish that a charity existed in this case. By default, the Council had to argue that it did not.

The Judgment

The only matter decided by the Court was that the land is subject to a charitable trust, as a result of the application of the Charitable Trusts (Validation) Act 1954. All other comments and statements contained within the Judgment though no doubt persuasive, are not binding.

The Council contended that

(a) the Conveyance of the land to the Council's statutory predecessor The Mayor Aldermen and Citizens of The City of Bath ("the Corporation") on the 1st February 1956 took effect as a conveyance beneficially for statutory purposes;

(b) if that were wrong, the trust referred to in the 1956 Conveyance was not a valid charitable trust;

(c) if (b) were wrong, the trust was nevertheless void because the Corporation did not have power to hold the land on a charitable trust;

(d) if either (b) or (c) were correct, the Council would now hold the land beneficially.

The principle behind (d) was a follows. Where a trust is intended to be created but fails, what is known as a "resulting trust" may arise, for the benefit of the party or parties by whose generosity the trust arose. The Treasury Solicitor (bona vacantia) was represented on this point. The company which conveyed the land to the Council's predecessor had been dissolved. Any assets it had would have vested in the Crown as bona vacantia (which means "vacant goods"). So, if it were to any extent because of the company's generosity that the trust came into being, the Crown would receive that benefit.

If the contention in (a) were right, it would be on the basis that the wording of the 1956 Conveyance was intended to do no more than identify the statutory purposes. (Section 4 of the Physical Training and Recreation Act 1937, which has since been repealed and replaced.) The indications in favour of this were that the terms of the 1956 Conveyance contemplated the expenditure of ratepayers' money, that full stamp duty was paid, not the reduced rate applicable on a conveyance of land to a charity trustee, and that the language used was consistent with the purposes of the 1937 Act. The Judge did not agree, however. If all that have been intended was a reference to the statutory purposes, the 1956 Conveyance could have said so simply enough. Further, the words "upon trust" must mean something.

The contention in (b) was on the basis that the wording of the 1956 Conveyance envisaged uses of the land which were not exclusively charitable, and that there was insufficient public benefit expressed. To be charitable in these circumstances, the trusts would need to fall within the description "other purposes beneficial to the community". There are two aspects to this. First, the purpose itself must be beneficial as one of public utility. Secondly, the benefit must be available to a sufficient section of the community. The Judge considered that the words requiring there to be no "undue preference to .... any particular person club body or organisation" mean that all persons clubs bodies or organisations were potential beneficiaries. Thus there was sufficient public benefit. It is settled law that a trust of land for its use for the purposes of public recreation is charitable. The Council argued that the trusts here were for the promotion of games and sports of all kinds, and that such trusts are not charitable. The Attorney General argued that a trust for the provision of facilities for public recreation by way of sport or otherwise will not fail as a charitable trust simply because some of the activities which take place are not themselves necessarily charitable. The Judge agreed, but felt it necessary to search further to find whether there was the dominant intention to maintain a public recreation ground. He found it in the public character of the Corporation itself. The conclusion was that a recreational facility for the public was the dominant intention of the trusts, to which all the express provisions should be regarded as ancillary.

As for (c), the Judge stated that provisions in Section 4 of the 1937 Act meant that the conveyance could have been made to another local authority or to a voluntary organisation set up for the purpose, and the Corporation could lawfully have resolved to pay the acquisition cost as an expense of "providing or maintaining" the facility. He believed that it was permissible for the Corporation to act as a charitable trustee itself, as this conduced towards, or was incidental to, the discharge of the statutory function.

Finally, with regard to (d), the Judge was prepared to infer that the Corporation had paid the full price for the land, even though he had not heard full evidence on the point. On the basis of the inference, had the trust failed, the Council's statutory predecessor would have been entitled to the beneficial interest.

The judgment of 2002 then created a situation where charity law was now applicable to the activities and management of the Recreation Ground and the terms of the trust had to be applied. In the Judge's view the fact that the conveyance was to the Corporation alone points to an overriding intention to benefit the public. However Hart J. specifically did not express a view on whether the current uses of the land were compatible with the trust as this was outside his remit, but he did expose a number of inconsistencies.

The beneficiaries of the purposes must be taken to be the public generally. The test of not showing any "undue preference.... to any particular person club body or organisation" can only be applied if one regards all persons clubs bodies or organisations as being potentially eligible as beneficiaries of the purposes.

The primary purpose is to secure the user of the land for or in connection with the carrying on of games and sports of all kinds. That purpose could equally be achieved either by a policy designed to achieve the purpose of providing for public recreation or one designed to achieve the purpose of encouraging competitive sport for the benefit of spectators or enjoyment of the participants. It is difficult to say that the draftsman had the first and only the first in mind.

Crystal Palace Trustees v. Minister of Town and Country Planning (1951) illustrates that the trustees' power to grant exclusive leases to existing clubs may be a legitimate means of implementing the charitable purpose.

A trust for the provision of facilities for public recreation by way of sport or otherwise will not fail as a charitable trust simply because some of the activities which make use of the facilities are not themselves necessarily charitable in nature, if the dominant user is that of a public recreation ground.

There is nothing in the conveyance which expressly dedicates the land to public use. Nor is there anything in the history of the recreation ground as at the date of 1956 conveyance which points to such a dedication: it had been owned for many years prima facie as a commercial concern. There seemed to the judge nothing in the express wording of the 1956 conveyance which would prevent the whole of the Recreation Ground from being let on a commercial basis to a variety of clubs bodies or organisations in such a way as to wholly exclude the wider public for the duration of such lettings. This is a possible method of implementing the trusts and is not prohibited by the requirement that the land be maintained as open space.

The above statements give some indication of how various questions as to what can, and cannot, be done within the terms of the trust might be determined were such questions to be brought to court. Indeed the arguments presented by the Council demonstrate the legal complexities of the situation.

Bath Rugby Club and Bath Leisure Centre

The objects of the Trust and the purpose of Charity give rise to two contentious issues which the Trustees must seek to resolve through the Strategic Review process. One of the basic objects of the Trust is that the land shall be held as an open space. Section 20 of the Open Spaces Act 1906 allows a minor portion of land to be used for ancillary buildings but clearly the Leisure Centre is not `minor' and therefore its provision and use is a breach of trust.

The second breach is in the use of the Recreation Ground by the Rugby Club. In 1995 rugby changed from an amateur to a professional sport. Providing facilities for professional rugby is not a charitable purpose and as such is inconsistent with the purpose of a charity because it gives rise to a private benefit. Notwithstanding that, the present lease enables the Rugby Club primacy for nine months of the year and as such cannot be regarded as merely incidental to the charitable purpose. It is therefore a dominating factor with regard to the Recreation Ground as a whole.

The position is however more complicated than that. The building of the Leisure Centre was based on legal opinion and only undertaken on the basis that it was in keeping with the objects of the Trust. Similarly the Charity Commission had determined that a charity did not exist prior to the granting of a lease to the Rugby Club in 1994. Both actions by the Council were therefore taken in good faith and on what were at the time perfectly reasonable grounds.

Recent legal advice

With regard to these breaches the Trust has recently received independent legal advice from Senior Counsel specialising in charity law. In the case of the Leisure Centre the opinion confirms that the Leisure Centre is in breach but goes further and casts doubt on the original 1967 view "I am therefore doubtful whether Mr Wigglesworth's opinion would be upheld in a court today. Its main purpose (objects of the Trust) limits those facilities to .... sports in the open air"

In the case of the main lease to the Rugby Club in 1994 which was investigated by the Receiver Baker Tilley, confirmation has been received from the Charity Commission that the lease is valid according to section 37(4) of the Charities Act 1993 provided the Club acted in good faith. Senior Counsel's opinion again supports this view "there is no doubt however in my view that the lease is valid...and therefore enforceable " Thus, whilst the Rugby Club's use of the Recreation Ground is technically in breach of the charitable object it has a legally valid lease.

Council's Liability for Breach

The fact that the actions taken by the Council and its predecessor were taken in good faith and on reasonable grounds does not mean that the breaches have not occurred or can be ignored. On the contrary, it is the Trust Board's urgent duty to put matters right. However, if any action were taken against the Council in its capacity as trustee by HM Attorney General or by the Charity Commission under section 32 of the Charities Act 1993, the Council could apply for relief under section 61 of the Trustee Act 1925 and,in the opinion of Senior Counsel, this would likely be granted, so long as steps were being taken to put matters right..

11. Bath Rugby plc

Part of the Recreation Ground is let to Bath Rugby plc. The main lease comprises a rugby pitch, the West Stand, and various other structures. Over recent years, the Club has carried out major improvements to the property which include constructing the South Stand (Hampton Stand), clubhouse and refurbishing the President's Lodge. A temporary stand is erected for the rugby season.

The Rugby Club use the ground for approximately sixteen first team games each season primarily on weekends. The season is effective between September and end of May the following year after which the temporary stand is removed opening up the rugby club area for more easily accessible public use. In addition the United team (reserve team) play home matches during the week and the facilities are also used by the Bath women's amateur team. The total number of days required for rugby matches are approximately 50 per season. Average attendance at first team matches is around 10,500 i.e. the ground's capacity.

Bath Rugby operates a range of initiatives through its Charity, The Bath Rugby Community Foundation (reg No. 1101868) employing four full-time members of staff. The range of projects undertaken by the Foundation impacts on schools, both inside and outside the Council area and is supplemented by a regular programme of school visits supported and enabled by the playing staff. Since its inception over 12,000 people have taken part in one or more of these activities. A number of activities also take place on the Rec during the season.

Reflecting on the contentious issue of the Rugby Club dominating the Rec, it would seem that the present lease affords the club control over the area they occupy for nine months or approximately 270 days per year.

This property has been utilised by Bath Rugby Club since 1894 under various lease arrangements. On 9th January 1973 a new lease was entered into for 75 years from 1st September 1972 with a rent of £475 per annum and rent reviews every 15 years, the last being £10,000 per annum. The landlord was responsible for all repairs and ground maintenance which in 1992 was estimated at £18,000 per annum leaving the Council with a deficit of £8,000 per annum.

In 1992, the Rugby Club decided to renegotiate the terms of their present lease to allow them to erect a new South Stand on the Recreation Ground and to carry out other improvements necessary in order to safeguard their pre-eminent position within the world of Rugby Union (it was at this time that Charity Commission indicated that were an application made for registration,its legal officer would advise the application should be refusedThis gave the Trust an opportunity to relinquish all maintenance responsibilities apart from the pitch and after lengthy negotiations, a rent of £5,000 per annum was agreed, together with other terms of a new lease dated 23rd May 1995, commencing on the 10th October 1994 for 75 years with 5 year rent reviews. The current rent, following review, is £6,500. Under the new lease, the Trust has the added advantage of full use free of charge of the hospitality suite in the South Stand at all times other than on Match Days. There is also some revenue collected on Match Days for car parking by the Council on behalf of the Trust and similarly the Club is billed for 20 permanent passes for car parking outside its leased area. There is also a separate agreement for car parking and other activities by Bath Rugby on match days and other days. In 2003/04 this produced a further c. £12,000 income for the Trust.

An additional area of the Recreation Ground has been leased to the Club on which temporary stands are erected during the season. The last lease covered the 2006/7 playing season and was granted with effect from 22nd August 2006 on an Full Repairing and Insuring basis. The passing rent was £3,928.57 per guaranteed home game (for the season 2006/7 this equated to £58,928.55) plus £3,928.57 per extra Cup game held at the Recreation Ground. This lease expired on 22 May 2007.

A third lease is held by the Club for approximately 20 car parking spaces at the rear of the Sports Centre for use only on Match Days. The lease is for 20 years from 25th March 1996 with 5 year rent reviews - current rent is £2,000 per annum. This lease is of land that is considered to form part of the Leisure Centre. The income has therefore been received by the Council as part of its operation of that facility.

12. Bath Leisure Centre

As outlined above,in 1967 the Council sought legal advice as to whether the building of a Leisure Centre would be in breach of the `open space' term of the conveyance. Counsel Mr W S Wigglesworth interpreted the dominant purpose of the 1956 conveyance as the `provision of ground for the recreation of the public' and as having much broader meaning which extends to the provision of indoor as well as outdoor facilities. His view was that the conveyance created a charitable trust. He said that the building of a leisure centre would not breach the charitable trust as there were already buildings on the site at the time of the conveyance. The Leisure Centre was therefore built by Bath City Council and opened in 1975.

Leisure Centre Usage

 

2006/07

to Dec 06

2005/06

2004/05

2003/04

2002/03

           

No. of Users

472,093

700,649

596,726

516,825

564,330

           

The table demonstrates the number of paying customers utilising the facilities which includes a range of constituted clubs and regular group bookings has been growing over recent years particularly as a result of the new fitness suite.

Aquaterra (the charity currently managing the leisure centre) have undertaken a number of targeted initiatives designed to encourage healthy exercise which include;

The `Passport to Health' scheme where individuals are referred by their doctors to tailored fitness programmes has led to 50% of referrals taking up fitness centre membership

A new children's Gym is in place and plans in progress to launch a childhood obesity programme.

New discounted rates are in place for teenage mums and members of the Genesis Trust

The Receiver-Manager proposed that the most appropriate way to remedy the Leisure Centre breach was to dispose of the land and building to the Council. The Charity Commission accepted this and negotiations began between the Receiver-Manager and the Council. A provisional agreement was reached to sell the Leisure Centre to the Council for A3750k in full and final settlement of all claims against the Council. The proposal was accepted by the Trustees and duly advertised according to the requirements of the Charities Act.

However following representations received by the Charity Commission regarding the disposal, the Charity Commission requested that the Trustees reconsider the disposal and instead make a temporary change to the Trust's charitable objects allowing the Leisure Centre to remain as part of the Trust for the remainder of its useful life. On 13th December 2005 the Trustees reaffirmed their decision to dispose of the Leisure Centre to the Council on the basis that there would be no guarantee that the building would ever be removed, that the costs of such removal could be born by the Trust and that the Trust's present financial circumstances made it necessary to receive income immediately. This was reported to the Charity Commission, who have made no further determination pending the outcome of the Strategic Review.

There is a car park which consists of part of the same building as the leisure centre and also some adjoining Trust land, which currently produces income in excess of A3150,000 pa. (A3168,320 gross in 2005-06). This income has been regarded by Bath and North East Somerset Council as the Council's income associated with the running of the Leisure Centre and this position is understood by the Trust (who have not challenged this position) as the car park and Leisure Centre were provided at the Council's expense at the same time. No car park existed in that location previously.

However, Senior Counsel, who was engaged some time after the provisional agreement had been reached about the sale of the Leisure Centre to the Council, has consistently advised that there is another way of looking at the matter, ie that both the Leisure Centre and the car park were provided on Trust land for the purposes of the Trust, and on the footing that the Council would bear any loss. The Council as trustee was originally advised that the charitable purposes of the Trust encompassed the provision of the Leisure Centre. If Mr Wigglesworth had advised correctly that the land was held for on charitable trusts for the outdoor recreation of the public it would have been open to the Council, then or in the early 1970s, to have applied to the Charity Commission for a Scheme to alter the purposes of the Trust to include indoor recreation(which is a potentially valid charitable purpose.).

If the Charity Commission had appreciated that the land was held on charitable trusts they would probably have agreed to make such a Scheme on the basis that there was a need and a demand for indoor recreational facilities in the centre of Bath and insufficient demand to ensure full use of the Recreation Ground for its original purpose of outdoor recreation. The fact that for perfectly good reasons the Council did not apply for such a Scheme in the 1970s does not prevent the Trustees applying for a Scheme for that purpose now, so as to enable the Leisure Centre to be retained by the Trust as part of its charitable provision, and for the car park also to be retained as an ancillary facility which also produces an income for the Trust.

The Board may consider that the numbers currently using the Leisure Centre, as well as the survey results, demonstrate that the need for it remains. If Counsel's advice is to be followed, and the Trustees and the Council agree that the Leisure Centre and car park are to be regarded for all purposes as assets of the Trust, it will be necessary from the Trust's point of view to obtain a commitment from the Council as local authority that it will continue to meet the deficit incurred in the running of the Leisure Centre after taking account of the car park income, since the Trust could never have undertaken such a project without such a subsidy being guaranteed. The past contributions of the Council to the building works should also be confirmed as having been a gift by the Council to the Trust.

Senior Council has confirmed as recently as the 22nd May 2007 that it is her considered view that in all the circumstances this interpretation is most likely to be accepted by the court as the correct one.

13. Public Consultation

There are several groups and organisations who have legitimate interests in the way the Rec is managed by the Trust, particularly with regard to any proposals brought forward for the future management of the Rec. At the outset of the strategic review it was felt to be important, and the Charity Commission confirmed this in principle, that any proposals or draft scheme submitted to the Commission for them to test against the conditions of the conveyance should be shown to have wide public support. At the same time, the Commission made clear that public support for a particular option could not be used to override something that they considered in breach of the legally-based terms of the conveyance.

However Senior Counsel has advised that there is nothing to prevent the Trustees from seeking a cy pres Scheme to alter the charitable purposes of the Recreation Ground if as part of the Strategic Review they are convinced that the existing charitable purposes are inadequate to enable the Trust's assets to be used effectively for its underlying objectives. Indeed there is a positive duty on charity trustees to apply for a cy pres scheme when this proves necessary.

The Trust therefore commissioned BDOR Ltd (a company with considerable experience of managing sensitive consultations) to conduct a public consultation exercise with a view to establishing the views of the public about the future use of the Rec.

The BDOR Report identified 3 options (derived from stakeholders' views) which should be considered by the Trust Board when determining a way forward for the Rec. These options together with their main implications may be summarised as follows

OPTION 1: MINIMAL IMPACT USES

Description

A7 The Leisure Centre is demolished and rebuilt on the Council land along North Parade Road (where the Pavilion now stands).

A7 Bath Rugby Club find alternative premises elsewhere.

A7 Remaining facilities are improved and, if necessary, rebuilt to accommodate a very wide range of outdoor sports and recreation activities.

A7 Those now using the Rec will be either voluntary/community sports or related groups, or those with a charitable purpose.

A7 The amount of actual open space is slightly increased.

A7 More opportunities are created for casual, informal access and recreation.

Implications

A7 By reducing single large uses, impacts such as traffic are spread or reduced.

A7 Capital (probably public) will be needed to rebuild the Leisure Centre, especially so on a restricted site.

A7 For this option to proceed, Bath Rugby will have to agree to surrender their existing long term lease for their main land `footprint', with financial implications.

A7 Lessens the impact of large buildings on what is an open space.

A7 Any stands, buildings etc. will have to be built/rebuilt and environmental improvements implemented.

A7 Widens public access, especially to the river frontage.

A7 Wider public access requires a higher level of community safety management.

A7 Wider and balanced range of uses.

A7 Voluntary and community uses are unlikely to generate enough income to enable the Trust to be viable over time without continued public subsidy.

A7 May reduce local economic benefit.

OPTION 2: VARIATIONS TO THE CURRENT USAGE

Description

A7 The land on which the Leisure Centre is located is sold or leased by the Trust to the Council and the Centre is rebuilt by the Council as and when appropriate.

A7 Bath Rugby stay on the Rec in facilities that meet Premiership standards.

A7 Bath Rugby's site area and facilities (stands, pavilion, club house, parking) are used throughout the year for a wider range of sport and recreational facilities than they are now.

A7 The Trust agrees a lease for any additional land required by Bath Rugby that reflects the club's professional status and the new diversity of uses.

A7 Another local cricket club takes over the management of the cricket activities in such a way as to make the Somerset County Cricket Club Bath Festival potentially viable again.

A7 All other Rec land is also used and managed for a wider range of activities than at present.

Implications

A7 Rugby stays at the Rec, County cricket might be encouraged back.

A7 It is assumed that Bath Rugby can fund their own redevelopments.

A7 Minimal disruption from what is there now and can be delivered quickly and phased relatively easily.

A7 Agreement, including financial, will have to be reached on the disposal of the Leisure Centre land.

A7 The Premiership may have requirements that limit Bath Rugby's ability to diversify with other uses.

A7 The site is enhanced environmentally to meet World Heritage Site standards, although this is a major challenge.

A7 Greater certainty about long term viability for the Trust.

A7 Continues, perhaps enhances local economic benefit.

A7 Challenge to achieve a proper balance of public and private benefit.

OPTION 3: SIGNIFICANT CHANGE

Description

A7 Council and Trust agree a formula to enable the Council land along North Parade Road to be fully included in an overall `masterplan' solution - `Rec plus'.

A7 The Leisure Centre and Bath Rugby stadium are combined into a single complex located close to North Parade Road.

A7 Access, especially for main events, is solely from North Parade Road.

A7 Any necessary new leases for Bath Rugby (and any others) are completely renegotiated based on a new `footprint' of land and balancing public and private benefit.

A7 The new complex is designed and managed to maximise sport and recreation uses throughout the year.

A7 Space is created for a more distinct cricket area and another local cricket club takes over the management of the cricket area in such a way as to make the Somerset County Cricket Club Bath Festival viable again.

A7 All other Rec land is also used and managed for a wider range of activities than at present.

Implications

A7 A long term, ambitious plan for the future but also complex and high risk.

A7 Not entirely within the control of the Trust.

A7 A high level of flexibility and joint working required on behalf of all local parties.

A7 Bath Rugby in particular will need to agree not just to the new scheme but also to the surrender of their long term lease on their current main land.

A7 If Bath Rugby agree to back this approach, it is assumed that they would contribute financially as for Option 2.

A7 Requires major change so inevitable disruption to current uses.

A7 Major capital required, current source unknown but probably mainly from the public sector (though some commercial input may be appropriate).

A7 Once completed, likely to be genuinely viable for the Trust.

A7 Creates a major sport and recreation focus of at least regional relevance.

A7 Appropriateness to a World Heritage Site is a major challenge.

A7 Impacts reduced for adjacent residents.

A7 Probably enhances local economic benefit.

A7 The Premiership may have requirements that limit diversification of Bath Rugby's site area and facilities.

A7 County cricket might be encouraged back.

The BDOR consultation process involved three main elements

A statistically based sample survey

A stakeholder survey

An open survey

In addition the consultation noted and took account of several other `unofficial' surveys/petitions organised by other interested parties as itemised in the BDOR report. During the course of the public consultation two specific documents emerged into the public domain proposing specific developments on the Recreation Ground which, whilst similar, also had distinctive characteristics. These two proposals promoted by Bath Rugby and Bath Sport are entirely separate but both included proposals for the future of Bath Rugby. These documents area attached as appendices 4 & 5

Throughout all sets of results, both `official' and 'unofficial', it is clear that a considerable majority of people support retention of the Leisure Centre and Bath Rugby on or around The Rec (ie. one of Options 2 or 3). The full BDOR Report is attached at appendix 2 and summarised results of the three surveys are reproduced below

Sample Survey

 

Response percent

Response total

Option 1

13%

93

Option 2

56%

420

Option 3

31%

233

Stakeholder Survey

CATEGORY

 

Option 1

Option 2

Option 3

No Option

City-wide Residents

5

0

4

1

0

Heritage/Environment

4

0.5

0.5

2

1

Immediate Residents

5

0

3

1

1

Private

2

0

2

0

0

Sport/Recreation

6

1

2.5

2.5

0

Users

9

3

5

1

0

Other

1

0

0

1

0

Totals

32

4.5

17

8.5

2

Open Survey

 

Response percent

Response total

Option 1

6.6%

168

Option 2

83.1%

2,112

Option 3

8.9%

227

None

1.3%

34

14. Financial evaluation of options

To assist with the evaluation of options the Board commissioned Ernst and Young to prepare a report setting out the various options for the future use of the Rec and assessing the potential financial position of each of the options in terms of immediate cost and ongoing impact. This was undertaken independently of the consultation process

The report examined the options and developed further possible scenarios that may emerge. In total E&Y evaluated two versions of option 1, four versions of option 2 and option 3 making seven options in all - i.e.

Option 1 - Reversion to minimal impact use

A7 Scenario 1a - Both Bath Rugby Club and the Leisure Centre vacate the Recreation Ground

A7 Scenario 1b - Bath Rugby Club vacates and does not sell lease, but the Leisure Centre vacates

Option 2 - Variations to Current Use

A7 Option 2a - Bath Rugby Club vacates and sells lease, but the Leisure Centre remains

A7 Option 2b - Bath Rugby Club vacates and does not sell lease, but the Leisure Centre remains

A7 Option 2c - Bath Rugby Club remains and the Leisure Centre vacates

A7 Option 2d - Both Bath Rugby Club and the Leisure Centre remain at the Recreation Ground

Option 3 - Significant Change

A7 Option 3a - Fundamental Redevelopment

The Ernst and Young report concludes that

`Option 1 (Reversion to minimal impact use) results in a substantial one-off and ongoing cost to the Trust and the Council whilst the overall objective of returning the Recreation Ground to its status before the Rugby Club was established could be frustrated for 63 years if the Rugby Club refuses to relinquish its lease.

Option 2 (Variations to current use) assuming that the Rugby Club and Leisure Centre both stay has a low impact on Council and Trust finances and provides the greatest level of security of all the options over the future independent financial viability of the Trust.

Option 3 (Redevelopment) would be a difficult plan to implement. Ownership, funding and commercial negotiations will add an additional level of complexity over option 2. On this basis a large amount of uncertainty exists over the deliverability of this option. The deadline of the Rugby Club to have identified a secure future by the end of the 06/07 season and the importance of the Rugby Club to the financial viability of any possible scheme makes this option appear improbable.

From the perspective of financial viability and likelihood of delivery, it is therefore difficult to propose any alternative to option 2

The full report is attached at appendix 3

15. Future Management Arrangements

The Public consultation revealed a desire for more involvement in the management and operational arrangements on the Recreation Ground. The Council as Trustee has significant responsibilities in carrying out its Trustee duties and cannot delegate these responsibilities with the existing powers of the Trust. Indeed the Charity Commission would have to authorise any such further enfranchisement of responsibility.

However in moving forward it would be desirable to engage beneficiaries in a more meaningful way and of course if this was formalised in the constitution of the Trust Board it would help to address any problems which might otherwise arise from the perceived conflict of interest which may from time to time arise between the Trust and the Council

Clearly such a development requires careful consideration. It would be appropriate for the Trust Board to consider alternative proposals once it has been determined which option and therefore way forward has been agreed with The Charity Commissioners. Such a development would of course have implications for the Council as well as the Trust and the Council would have to consider any recommendations forthcoming from the Trust Board in this context

Any proposals to change the Trusteeship would require approval of the Charity Commission and a scheme to implement them. Such a scheme could include the following provisions

Future Trusteeship - either the Council alone or a two tier body under which the Council would hold title to the land but a separate body of managing trustees would administer the Trust, of whom a minority would be appointed by the Council

Powers of delegation to a Committee

The establishment of an advisory body

16. Conclusions

General Conclusions

The Trust now finds itself in a difficult position, the roots of which are steeped in history and have developed over time. Since the conveyance in 1956, legal interpretation has varied and until the High Court Judgement in 2002 there was a lack of clarity

The trusts in the 1956 conveyance are not in exclusively charitable form and have to be interpreted by reference to the Charitable Trusts (Validation) Act 1954 in order for the purposes to be legally charitable and the deed itself valid.

Not surprisingly a range of differing views have emerged and remain with regard to the valid and future uses of the Rec. The most recent legal opinion appears to leave little room for doubt that the presence of a Professional Rugby Club and a leisure centre on the site of the Rec are breaches of the Trust.

However it is also clear that these breaches were made innocently and with the genuine belief that they did not cause conflict with the trusts, based on history and the prevailing legal advice.

Proposals to address the position will be complicated by the fact that the Rugby club possesses a valid lease with 62 years remaining (which is a valuable asset) and there is no obvious site on which the leisure centre could be relocated. Nor of course have any funds been identified to facilitate the resolution of these complications. In addition both the leisure centre and the rugby club are seen to be extremely popular amongst the community.

In broad terms the Charity Commission have the powers to facilitate the resolution of this situation by allowing the Trust to adopt any of the broad options identified in this report. However each of the options has obstacles of varying magnitudes to overcome and it is for the Board to determine which of these options is most likely to bring a lasting solution which best meets the objectives of the Trust given the history and complexities referred to above

As stated above a range of views have emerged about the most suitable way to deal with the present situation. In these circumstances it has to be recognised that any approach adopted will be more favourably received by some than others, Nevertheless the situation has to be resolved as a matter of urgency.

Going forward it would seem sensible to base the resolution of this situation on the analysis of the three main options identified earlier in this report which are considered individually below. Clearly there is some scope for a variety of approaches within the options but the Trust Board will need to be cognisant of the processes for deliverability within each of the options.

Option 1 - Reversion to minimal impact use (return the Rec to a green open space)

This is the option that would seek to adhere most literally to the objects of the Trust. In everyday terms these provide for the provision of a green open space which has to be maintained, made available to the beneficiaries and used to promote multiple recreational activities. Clearly there will be costs associated with achieving this At its most extreme variant it would involve the removal of both Bath Rugby Club and Bath Leisure Centre from the Recreation Ground. However as concluded there are legal and financial implications which cannot be ignored.

The Rugby Club has a valid lease which runs for a further 62 years and the Trust is unlikely to have the resources to purchase the lease from the Club. It is likely that under this option the Rugby Club would in fact remain on the Rec but be forced to play Premiership Rugby elsewhere. Whilst this would not of itself be of concern to the Trust Board it would have significant implications.

The removal of Premiership Rugby from the Rec would obviate the need for the Temporary East Stand and the income received by the Trust for the lease would be lost. At present this is the Trust's main source of income

The Club may have difficulty in continuing with its charitable work and the benefits that it brings to the local community.

The Club have indicated that the ground they occupy may need to be more intensively used resulting in the Club taking greater control over the site and restricting access within the terms of their main lease

The beneficial level of co-operation from the Rugby Club which the Trust has enjoyed could be put at risk

The Trust may need to permanently dispose of a part of its land in order to fund the delivery of this option if funding is not forthcoming from the Council

At the same time the Council would be forced to locate the Leisure Centre elsewhere and it has been suggested that this could replace the pavilion on the adjoining Council owned land. This option would require the Council's consent and as the pavilion itself is a well patronised and unique venue with a wide range of activities taking place it is not known whether or not the Council would agree. The Ernst & Young report takes the view that there are no alternative sites within Bath.

Whilst it must be acknowledged that there are members of the community who are strongly supportive of option 1, it was found to be the least popular by all three surveys undertaken as part of the public consultation exercise.

The Charity Commission recognise that this option would be in line with the Trusts of the Charity. However they also acknowledge that it may not be practical or possible at this time and that the Trust Board would need to consider the validity of any current tenancies

Option 2 - Variations to the current use (Keep the Rugby Club on the Rec and enlarge the footprint of the existing lease with the additional land requested by the Club as well as keeping the leisure centre on the Rec)

This is the option which was the most popular and which aims to regularise the existing position. It has the least impact on existing uses. However the Trust Board would need to be satisfied that any tenancies are robust and on terms that benefit the Charity.

It would by implication involve application to the Charity Commission seeking approval for a new scheme in accordance with Charity Law However it has been made clear by the Charity Commission that public opinion cannot be allowed to take precedence over the requirements of charity law and there are undoubted conflicts between the objectives of this option and the terms of the Trust as they currently stand.

The Commission has stated that they would 93have concerns if the underpinning of the proposals for the Strategic Review is that the charitable trusts would be altered. As you may already be aware this would require a Commission scheme and an application would only be accepted if the Trust Board were able to satisfy section 13 of the Act94

Tthe procedure laid down by the Commission for establishing a scheme is laid down in in 13 of the Charities Act 1993. On of the criteria laid down is that

93the original purposes in whole or in part have, since they were laid down, ceased薅to provide a suitable and effective method of using the property available by virtue of the gift, regard being had to the spirit of the gift94 - s 13(1)(e)(iii)of the 1993 Act.Counsel advises that In that context the 93original purposes94 are those set out in the 1956 deed, the 93property available by virtue of the gift94 excludes that part of the ground which is leased to the Rugby Club, and the 93spirit of the gift94 means the intention of the founder, i.e the broad recreational purpose for the benefit of the public that underlies the 1956 deed: Re Lepton's Charity [1972] Ch276' .

The Board should bear in mind the following considerations

the survey results which clearly indicate the preferences of the community for developing and improving the current beneficial uses although this cannot override charity law

, the fact that the Rugby Club ground would be made more available for wider community uses

the fact that the Rugby Club already makes a considerable contribution to amateur and school sport and would be amenable to committing itself to more of this in future,

The fact that a modern community stadium would encourage a far greater range of recreational activities

The fact that this option would provide a far greater degree of financial security for the Trust through a renegotiated lease ensuring its long term viability

the limited general use of the open space element of Recreation Ground by members of the public

In Ernst & Youngs opinion only this option provides any certainty of delivery

Were the Board to conclude that these considerations lead them to the conclusion that a scheme was desirable in the interest of the Trust,Counsel's opinion is that such a view was one it was permissible to take on the basis that the evidence available demonstrates that the criteria above are met.

With regard to the kinds of alterations which will need to be considered in seeking to establish a Scheme, Senior Counsel has listed:-

A change to the Object of Charity

Charitable use of land

Powers of letting and hiring out

Extension of lease to rugby club (including detailed terms of any extension)

Express power to sell (or lease) the site and buildings of the Leisure Centre to itself as local authority and grant necessary rights of access

The application of income and capital.

.With regard to the Object of Charity item, Senior Counsel advises that `Having regard to the fact that the trusts in the 1956 deed are not in exclusively charitable form and have to be interpreted by reference to the Charitable Trusts (Validation) Act 1954 in order for the purpose to be legally charitable and the deed itself valid, and also having regard to the changes since 1956 in the recreational needs of those living, studying and working in Bath, it is essential that the new scheme should set out a modern recreational object for the charity. This might follow the wording of the Recreational Charities Act 1958 and state for example that 93The object of the Charity is the provision in the interests of social welfare of a recreational ground and other facilities for the recreation and leisure-time occupation of the members of the public living studying or working in or near the City of Bath with the object of improving their conditions of life94

Option 3 - Significant Change (Develop the whole of the Rec (including land occupied by the Rugby Club and leisure centre)

This option again seeks to regularise the existing position but goes further in attempting to provide a greater area of green open space for beneficiaries in accordance with the trusts, whilst at the same time developing the facilities of existing tenants,

This option appears to have potential for optimising the charitable recreational benefit that the Trust offers to the community in the long term. However detailed thought needs to be given to its deliverability.

The same issues raised under the consideration of option two apply equally to this option. A case would need to be made to the Charity Commission for a scheme to enable the option to proceed. Whilst the same arguments can be used, this option is further complicated by additional deliverability issues

The need to assemble land not in the ownership of the Trust

The potential need to relocate existing facilities either temporarily or permanently including the pavilion

The need to secure adequate funding based on a detailed feasibility study including potential Council funding

The need to establish and confirm long term viability of any proposed venture

The complex planning consent that would be required

The mix of tenure arrangements that would need to be agreed

The timescale for delivery is indeterminate and may not become clear for some time leaving the Trust in a state of uncertainty

17. Recommendations

The Board is invited to consider the issues raised and options identified by the Strategic Review and to determine a preferred way forward for the Bath Recreation Ground.

.