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The Preston Down Trust, a Devon-based congregation of the Plymouth Brethren Christian Church, applied to the Charity Commission to be registered as a charity five years ago and was rejected in June 2012.
The agreement averted a tribunal case that might have been long, expensive and bruising. But some charity lawyers think the outcome has done little to develop the complex area of charity law on religion in the way a full hearing might have done.
"If it's not judicial, it's open to challenge," says Tom Murdoch (right), a senior associate at the law firm Stone King. "Judgments are the oxygen of charity law and, unless you get those authoritative judgments, law stays in the 19th century, or in the 17th century - it doesn't move with the times."
A key issue at stake was public benefit, something that religious, educational and anti-poverty organisations were automatically assumed to provide before the Charities Act 2006. In initially rejecting the PDT's application, the commission found that it did not offer sufficient public benefit to gain charitable status.
"On the face of it, the 2006 act is clear that the presumption of benefit was removed," says Murdoch. "I agree with that analysis. I don't think that should be controversial, but there are very learned people who consider that the effect of the removal of the presumption of public benefit is in doubt because another element of the 2006 act is that it incorporates previous case law."
Benjamin James, a partner at the law firm Wallace LLP, says the resolution of the matter is "indicative of the Charity Commission's positions" and has a broader use. "If you're looking at traditional religion, and the Brethren are a relatively traditional religion compared with the Christian Scientists, then it's a confirmation that the Charity Commission is following precedent, which is what we need as lawyers," he says.
Emma Moody, head of charities at the law firm Bond Dickinson, agrees with Murdoch that out-of-court settlements like that secured by the Preston Down Trust are "always a pity for lawyers because we want to see the core of the issues".
But she says the decision was probably the right result for the charity, in particular because it avoided excessive legal costs. Sam Younger, head of the commission, told MPs on the Public Accounts Committee this month that balancing such practical concerns against the opportunity to establish precedent was "a dilemma for us".
Nevertheless, Moody (right) says, the commission made a clear statement of its intention to enforce publicbenefit requirements. A trickier question, she says, is the possibly large number of religious charities that registered before the 2006 Act under the assumption of providing public benefit, but which would not pass the test today. Many charities that do not provide public benefit are unlikely to get caught, she says, providing they do not come across the commission's radar. "Unless they fail to file accounts or there is some whistle-blowing, they can carry on undetected," she says.