§ Lord Denningasked Her Majesty's Government:
What is the legal basis for the implication in paragraph 71 and 72 of the Report of the Charity Commission for 1988 that, in deciding whether to sell land, the trustees of a charity must seek the full market value "setting aside any personal views and any wider interests", and, in particular, not promote a "worthy local cause at less than full market value", and must give priority to a "sale to a developer" although local opinion is opposed to it.
Earl FerrersThe Charity Commissioners do not accept that paragraphs 71 and 72 of their report for the year 1988 have the implications referred to in the Question. Where the trustees have properly reached a decision to sell charity land they must take reasonable steps to secure the best and most advantageous terms in the interest of their charity in accordance with the law derived from decisions of the courts such asButtle v. Saunders [1950] 1 AER 193.
The commissioners accept that, if a sale to another charity would further the purposes of the trustees' own charity, they may properly sell their land to such other charity at less than the best price obtainable. Similarly they may, in certain circumstances, impose restrictive covenants for the benefit of any land retained. But the commissioners do not consider that, in general, the law allows charity trustees, in deciding which of several offers to accept, to take into account their own views or those of local public opinion on planning matters or on the desirability of using the land to promote some purpose which is not within the purposes of their charity.
These principles flow from the fiduciary duty of trustees to secure the best terms available.