Neville Estates v Madden [1962] Ch. 832

What’s the case about?
The trustees of Catford Synagogue wanted to sell surplus land they owned at the rear of their synagogue.  On March 3 1959 a developer offered to buy the land for £10,000; the trustees agreed and the conveyancing process began.  The developer applied for permission to build flats on the land, even though he hadn’t exchanged contracts with the trustees yet.

The trustees sought the Charity Commission’s permission to sell the land, thinking this would be a mere formality.  On 20 May 1959 the Charity Commission informed the trustees that they would permit a sale for £10,000 - provided that they first publish a notice inviting interested parties to make higher offers.

On 1 June the trustees and the developer exchanged contracts, with a planned completion date of 13 July.  A clause was inserted in the contract stating that the contract was subject to the consent of the Charity Commissioners, so far as it might be required.

On 28 June the developer obtained planning permission to build the flats.  The result of this was the land increased in value and the trustees received a number of higher offers from potential buyers. 

In the light of the higher offers, the Charity Commission informed the trustees that they would not permit the sale of the land for less than £14,300.  The developer refused to increase his offer and brought an action against the trustees to force them to complete the sale.

Where is it on the map?

At point T.

Who won?

The trustees of the synagogue ‘won’, insofar as they weren’t forced to complete the sale for £10,000.  However, as the judgment makes clear, the trustees had some sympathy with the developer whose own actions had increased the value of the land.  It appears that the trustees would have been happy to complete the sale for £10,000 if only the Charity Commissioners had let them! 

What’s the principle of law?

The case turned on whether the trust that owned the land was charitable – if it was, the Charity Commissioners had a duty to intervene and prevent a sale below the market value.  If the trust was non-charitable then the Charity Commission had no duty and could not prevent a sale.  

If the trust was charitable, it was because it was for a religious purpose.  But, trusts for a religious purpose must also have a public benefit if they are to enjoy charitable status.  The developer sought to rely on the case of Gilmour v Coats [1949] AC 426 to argue that because the synagogue was primarily for the benefit of Jews it did not provide any benefit for the public at large.

The judge, Cross J, disagreed with this argument.  He stated that even if the general public did not visit the synagogue, the members of the congregation, unlike the nuns in Gilmour v Coats, “lived in the world” and “mixed with their fellow citizens”.  The judge stressed that he was not classing one religion as more beneficial than another, but that some religion was likely to be better than none and therefore a religious organisation whose members mixed with the rest of society was capable of producing a public benefit.  Because of this, the judge held that the land was held by a charitable trust.

What’s it like today?

The synagogue is still on Crantock Road in Catford.  It is an orthodox synagogue and when I visited there were quite a few people milling around after the Shabbat morning service.  Orthodox Jews wouldn’t use a camera on Shabbat and for this reason I thought it would be disrespectful to take photos. However, there are a few photos on their website.

It's not clear whether the developer ending up paying the extra £4,300 to complete the sale.  But it does look like the flats were built - there are a number of low-rise flats and garages backing on to the synagogue (on Callender Road) which are similar to the proposed development described in the judgment.

The public benefit requirement for charitable religious trusts is still a very live issue.  The Plymouth Brethren have had a long running dispute with the Charity Commission about whether they should be treated as a charity.  There is plenty of coverage of this online, but for a fairly comprehensive selection, take a look at the Third Sector website.