02. The Trusts 1976

In 1976 the charity was established. The Parish Council purchased the Old School to be used as a village hall, to be held on the trusts set out in the conveyance. The conveyance included a Schedule which has since functioned as the charity’s governing document.

The governing document established a village hall charity for the benefit of Mulbarton residents and set out how the property was to be held and managed. All inhabitants of Mulbarton aged 18 and over are entitled to attend and vote at General Meetings of the charity. Here we summarise the rules and roles of that document.

Managing Trustees

The “Trusts” in the Schedule tell managing trustees how they must manage their property to provide the charitable service of a village hall to the village.

The governing document provides that managing trustees (up to 6 elected, up to 4 co-opted and a variable number appointed by hiring groups) are responsible for the following functions:

1. Singularly and collectively liable and responsible for the charity and its assets, and for ensuring compliance with charity and trustee law
2. To maintain a list of village organisations who may appoint representative trustees
3. To co-opt up to four trustees
4. To convene at least two ordinary meetings per year and one annual general meeting
5. To keep accounts and present them annually to the Charity Commission
6. To maintain/repair the property that is protected by law to accomplish the charity object, and to insure against risks
7. To manage receipt of income for the charity, in donations or bookings and to make arrangements for and monitor a bookings process
8. To apply the Charity income for the purposes of a Village Hall for residents and invest as needed to support that object
9. To keep minutes of all meetings
10. To manage any mortgages or charges
11. To manage any process of letting/selling all or part of the Property
12. To instruct the custodian trustee of any lawful action required of them
13. NOT to let, sell or mortgage any part of the protected Property unless:
    • the Charity would still have sufficient property (including buildings and car park) to fulfil its charity object;
    • a minimum 75% of inhabitants at a General Meeting support it;
    • the Charity Commission consent;
    • trustees judge it in the best interests of the Charity.

Custodian Trustee

Because the charity owns property and requires property to do its thing, in order to avoid the troubling situation of having to convey property afresh every time a trustee comes or goes, the charity needs a silent corporate partner that never changes. “Corporate” means a group of people who have their own legal identity as an organisation. This corporate body holds the legal title to property on behalf of the charity and executes legal documents as required to give effect to the decisions of the managing trustees.

The trusts (or governing document) also tells the custodian trustee how to assist the managing trustees. This role is often subject to misunderstanding.

The corporate custodian trustee (Mulbarton Parish Council) is:

1. To have custody of the property title and trust property documents, and to give free access to the management committee
2. To have power to appoint a representative trustee to the management committee.
3. To receive income from selling or letting, in whole or part, the Trust Property; provided that it may pass the income onto the management committee, or apply it for the purposes of the Charity, as the management committee direct
4. To enable the managing trustees to fulfil their duties by carrying out any other lawful instructions
5. NOT to manage or carry on any business on behalf of the charity
6. NOT to manage any part of the trust property, land or buildings (unless by special arrangement as a “Parish Council” tenant – a Custodian Trustee cannot be a tenant, but a Parish Council can, so the distinction becomes important)
7. NOT to exercise any power or discretion exercisable by the managing trustees
8. NOT to act as a managing trustee

Further Guidance

More guidance can be found about the roles of managing trustees and custodian trustees in Charity Commission guidance papers, and on the Community Action for Norfolk website.

Charity Commission

Charity Commission Operating Guidance: Corporate Trustees (OG38)

This contains a summary of the Charity Commission’s position on Parish Councils being managing trustees, and running Village Halls as charities:

“While we would not refuse registration to a charity with a local authority as trustee, there are a number of reasons why we would prefer that local authorities are not trustees of charities.”

OG38, s.2.2

Charity Commission Operating Guidance: Custodian Trustee (OG39)

This lays out the Charity Commission’s position on Parish Councils being custodian trustees:

“Local charities such as village halls or community associations may wish to appoint the local authority as a custodian trustee.  This has the distinct advantage of not having to execute a deed every time a holding trustee changes, as the local authority has perpetual succession.

It also avoids most of the potential pitfalls associated with appointing the local authority as managing trustee of the charity (see OG 38 Corporate Trustees and also OG 56 Local authorities and trustees), as the members of the management committee of the hall or association remain charity trustees and retain control of the charity.  The custodian trustee can only act on the lawful instruction of the charity trustees. Even then, there have in the past been problems with local authorities misunderstanding their role as custodian trustees, so our general policy is strongly to suggest that the land be vested in the Official Custodian instead.“

OG39, s.6

Community Action for Norfolk

CAN: Know your trustees.

Community Action for Norfolk (CAN), the regional branch of Action with Community in Rural England (ACRE), who support over 10,000 rural English village halls, has helpful advice to clarify the roles of the different sorts of trustees.

This includes the following guidance, intended to correct common misunderstandings:

Unincorporated charities do not have their own legal identity. They ‘borrow’ the legal identities of their trustees to enter into contracts and to own assets. When an unincorporated charity owns property or land it might appoint a Custodian Trustee to hold the title deeds on their behalf in perpetuity. The Custodian Trustee is a corporate body, such as a Parish Council or the Official Custodian of Charities. Whilst the Custodian Trustee holds the title to all property on behalf of the charity, it does not take part in the day-to-day management and operation of the charity.

So the Custodian Trustee owns the property?

No. The property is owned by the charity. The Custodian Trustee functions as a sort of long-term ‘safety box’. It means the charity’s Managing Trustees can change over time without having to worry about changing the title deeds.

Is the Custodian Trustee in charge then?

Again no. The Managing Trustees are responsible and liable for the running of the charity and decision-making. The Custodian Trustee has no part in this; their one role is to hold on to those title documents for the life of the charity, and provide them if requested.

Community Action Norfolk: Know Your Trustees

In Short

Managing trustees are individuals who are trusted to manage all decision-making for every use of the charity property and to deliver Village Hall facilities to residents. They are responsible for maintaining, repairing and insuring only the parts of the property used directly for the Village Hall facility. Other parts of the property may be occupied by others to derive income for the Charity.

A custodian trustee is a corporate body that holds the legal title to property on behalf of the charity, without getting otherwise involved.

These were the roles established for Mulbarton Village Hall Charity in 1976, when the Charity was formed.

The Complicating Factor

What makes Mulbarton’s situation more complex than many others is the site move from the Old School in 1989. The documentation highlights where uncertainty arose about what precise property these roles were to apply to, following the transition. The roles apply to the property held in trust, but it became less clear what exactly that was.

Following legal advice, and advice from Charity Commission, managing trustees drafted a new declaration of trust for their custodian trustee to sign, with the aim of providing a stronger and clearer legal foundation: