Charities Bill [HL]

We debated this amendment last time round. I said at that time that we wanted to give further consideration to Amendment No. 180. As the noble Lord will have noticed, we have amended the Bill to take in the first part of Amendment No. 180 but not the second part; that is, the amendment we are now discussing. The amendment seeks to add to the list of items in new Section 75D(3) to which the new merger vesting provisions will not apply. There are two separate issues which this amendment covers, the first of which is contractual obligations owed by the charity, which are liabilities of the charity, not property. The new merger provisions in new Section 75D(3) apply only to property, so they will not apply to liabilities such as contractual obligations. So the part of this amendment that refers to obligations owed by the charity is not necessary. The second issue that the amendment covers relates to the vesting of the rights of the transferor charity in the transferee charity on a merger. Under the Bill as currently drafted, such rights would automatically vest in the transferee charity. For example, if A owes the transferor charity money, on a merger the right to receive payment will automatically vest in the transferee charity. If A’s liability is guaranteed by B, the benefit of the guarantee will also vest in the transferee charity. The effect of the amendment would be to prevent the vesting of the right of the transferor charity to payment in the transferee charity if A’s liability is the subject of a guarantee and B, the guarantor, does not give consent. It may be that the noble Lord, Lord Hodgson, does not wish to go so far as this. The purpose may simply be to enable B, the guarantor, to be released from his guarantee, if the benefit of the liability which he has guaranteed is transferred from the transferor charity to the transferee charity without his approval. I can see why B might want to terminate a guarantee in those circumstances. In giving the guarantee he might have been concerned very specifically with the interests of the transferor charity, and may have wanted to reinforce that charity’s right to receive due payment. He may have no corresponding interest in the transferee charity. But this, in our view, is a point that should be dealt with in the guarantee which is given—it would be possible to stipulate that the guarantor should have the right to terminate the guarantee in the event of the transfer of the relevant right to another charity. We think there is no reason why the Bill should give the guarantor this sort of right if he has not stipulated for it. Therefore, we do not think that the amendment is necessary or desirable. I hope that for the reasons I have set out the noble Lord will feel able to withdraw the amendment.