The claimant was a registered charitable company and the owner of 15a and 37 Camden High Street, London, SW1 7JE (the property). In or around November 2016 the claimant’s directors decided to sell the property and instructed Robert Irving Burns (RIB) to market it. Following a targeted marketing campaign, the defendant made a formal bid to buy the property for £8,000,000. Heads of terms were agreed on 22 December 2016.
On 10 January 2017, the claimant instructed Mr Bryn Williams of DTZ Tie Leung Ltd (trading as Cushman & Wakefield) (CW) to prepare a report. A report was provided on 20 January 2017 giving a ‘red book’ valuation of £7,500,000. The report recorded that it was provided for the trustees in connection with the disposal of the property and set out the relevant parts of s119 Charities Act 2011. The report explained its valuation methodology but did not address the marketing process in any detail and incorrectly implied that six months’ marketing had taken place. It did not advise on advertising the property or whether it was in the claimant’s best interests to advertise.
On 5 May 2017 the claimant contracted with the defendant to sell the property for £8,010,000. A deposit of £410,000 was paid and completion fixed for 31 October 2017 (subsequently varied to 15 December 2017). The main body of the contract did not contain a statement complying with s122(2) Charities Act 2011. However, para 9 of the contract specified that the transfer deed was to be in an agreed form annexed to the contract. The draft transfer deed contained a certificate in the following terms:
‘11.5 The David Roberts Art Foundation Limited as a non-exempt charity certify that they have power to effect this disposition and that it has complied with the provisions of ss117-121 of the Charities Act 2011 (formerly ss36-39 of the Charities Act 1993) so far as applicable to this disposition pursuant to the restriction dated 10 March 2009 at entry 3 of the Proprietorship register of title number LN20604′ [sic]
The claimant served notices to complete on 15 December 2017 and 5 February 2018, but the defendant failed to do so. On 23 February, the claimant gave notice of rescission in accordance with the contract. On 23 February 2018, the claimant sold the property to a third party for £5,500,000.
The claimant issued a claim on 25 April 2018 seeking a declaration that the contract had been validly rescinded and that the deposit was forfeit, and judgment for the balance of the deposit under the terms of the contract and damages. The defendant defended on the basis that the contract was unenforceable because the claimant had failed to comply with Part 7 Charities Act 2011 and counterclaimed for return of the deposit. The claimant then amended her claim to seek rectification of the contract and applied for summary judgment.
Held (dismissing the application):
Amendment/Companies Act 2006
The claimant was not permitted to seek summary judgment on the basis that the agreement came within s42 Companies Act 2006 because this did not appear in its amended particulars of claim and no permission to re-amend them had been made. It was not open to go beyond the confines of the pleaded case without permission to amend when seeking summary judgment.
Subsection 122(2) Charities Act 2011
Section 122(2) Charities Act 2011 required the contract to state the three items in s122(2)(a) (that the land is held by or in trust for a charity), (b) (whether the charity is an exempt charity and whether the disposition falls within s117(3)(a), (b), (c), or (d), and (c) (if it is not an exempt charity and the disposition is not within s117(3)(a), (b), (c), or (d), that the land is subject to the restrictions ion dispositions imposed by ss117 to 121.
Ideally, these matters are best stated together in a form that is readily identifiable as a statement under s122(2), but there is no reason why they should not be set out in separate parts of the contract. It suffices that the contract contains the information in a form that can be understood on a careful reading of it. Since the transfer was an integral part of the agreement, information stated in the transfer was to be regarded as being stated in the agreement.
It was unnecessary to determine whether the certificate in the transfer was sufficient to satisfy s122(2), but the claimant would have had ‘very real difficulty’ demonstrating that it contained the information prescribed in s122(2)(c).
Section 122 can fairly be regarded as subsidiary to the principal requirements in Part 7 Charities Act 2011 and is more in the nature of ‘statutory machinery’ than a requirement that has importance in its own right. As a matter of construction, Parliament cannot have intended that a failure to include the statements in a contract would lead to that contract being invalid, which would be disproportionate to the role played by the requirement in the statutory regime (R v Soneji  1 AC 340 applied).
It was unnecessary to deal with the claimant’s case on rectification. Had it been necessary, it would have been held that the defendant had a real prospect of defending that part of the claim. The claimant’s evidence came nowhere near meeting the standard of ‘convincing proof’ or ‘strong irrefragable evidence’, and there was no basis for the parties having shared an express intention to include the s122(2) statement.
The requirements in s119(1) Charities Act 2011 are chronological. The sequence should generally be (1) the trustees consider making a disposition of land triggering the need to follow the requirements of s119(1) or seek an order from the court or the Commission), (2) a report from a surveyor is obtained in the specified form, (3) the report should advise on the manner and period of advertising and on the manner of disposing of the property so that the terms on which it is disposed of are the best that can reasonably be obtained, (4) the report is considered by the trustees, (5) the report is advertised unless the surveyor has advised against it, (6) an offer is made by a prospective buyer, (7) the trustees must make a decision about the terms of the disposition considering the report again (and possibly obtaining a supplement) when deciding whether the terms are the best that can reasonably be obtained.
In this case there had been partial compliance with s119(1) which distinguished it from Bayoumi Women’s Total Abstinence Union Ltd  WTLR 133. A report had been obtained, albeit after terms of sale had been agreed in principle. Parliament cannot have intended that failure to advertise, or to obtain proper prospective advice that advertisement was contrary to the best interests of the charity, should invariably render the agreement void, voidable, or unenforceable. The requirements of s119(1) should be interpreted in light of the ‘overriding test’ of whether the terms of the disposition were the best that could reasonably be obtained for the charity. If the charity could demonstrate that advertising would have made no difference, a failure to advertise or take advice about the need for advertising, should not impugn the transaction. Equally, if the trustees were (and are) satisfied that the disposal achieved the best price reasonably obtainable, the transaction is not rendered unenforceable because the report was obtained later than envisaged by s119(1).
However, in the circumstances, the case was not suitable for summary judgment. The claimant had not produced evidence about the trustees’ initial decision to market the property, or what instructions they gave to their agents, or what advice they took. Neither was there evidence about why the disposition was not advertised, or that the lack of advertising made no difference to the sale terms, or whether or how the directors had reached the view that the terms of the disposition were the best that could be reasonably obtained for the charity (the minutes being unsatisfactory), and there was minimal evidence about the steps they took to market the property.JUDGMENT CHIEF MASTER MARSH:  The claimant is a charitable company registered with the Charity Commission. It has applied for judgment on its claim pursuant to CPR 24.2 on the basis that the defendant has no real prospect of successfully defending the claim and there is no other compelling reason why the claim should be …