Varsani & Ors v Jesani & Ors [1998] EWCA Civ 630 (3 April 1998)

1. This appeal from the order of Carnwath J made on 20th May 1997 concerns the jurisdiction of the Court to make a scheme for the division of the funds of a religious charity when the adherents to the faith for the promotion of which the charity was established have been divided by a schism. Carnwath J considered that he had the necessary jurisdiction and gave directions to enable a suitable scheme to be prepared for the consideration of the Court.

2. The charity concerned was constituted by a Declaration of Trust made on 15th April 1967 by three of the four parties to these appeals, namely Mr Jinabhai Ramji Jesani, Mr Mavji Karsan Patel and Mr Premji Devraj Varsani. The fourth party is H.M.Attorney-General whose duty it is in representing the Crown as parens patriae to intervene for the purpose of protecting charities and to afford assistance to the Court in the administration of charitable trusts. The Declaration of Trust recited that there had been a general expression of desire on the part of many persons professing the faith of Swaminarayan and living in the neighbourhood of Hendon, London, N.W.4. to promote such faith. By clause 1 it was provided that the charity, to which I shall refer as “the Charity”, should be called “Shree Swaminarayan Sidhant Sajivan Mandal London”. Clause 2 stated that

Clause 3 directed the Trustees, who were and still are the three parties to the Declaration of Trust, to hold the freehold property specified in the schedule “upon trust to use and maintain the same for the use of the said faith as aforesaid”. The remaining clauses contained administrative and other ancillary provisions commonly found in such a declaration of trust. The schism to which I have referred occurred in 1985. At that time the assets of the Charity comprised Temples in North London and Bolton, Lancashire, to a then aggregate value of £540,000 and an endowment fund of about £26,600. Since the schism further assets have been acquired by each of the two groups of adherents.

“At the date of the 1967 Deed the plaintiffs and the defendants were both followers of a Hindu sect, Shree Swaminarayan Gadi, based in Maninagar, Gujarat, India. The sect was one of several which follow the faith of Swaminarayan. The faith of Swaminarayan was founded in the early 19th century by Shree Swaminarayan Bhagwan ("the founder") in Gujarat in India. It is a Hindu religion with a large following in India and elsewhere. An essential tenet of the faith is that the founder is believed to have been the incarnation or manifestation of the Supreme Being. The founder established a structure involving two classes of adherents, ascetics ("sadhus") and lay members. He organised his followers into two groups, one at Vadtal and the other at Ahmedabad in Gujarat.

After the founder's death, there were divisions among his followers, concerned particularly with the identity and nature of his successors. The sect with which I am concerned originated from the Ahmedabad centre. They believe that there has been a direct line of succession from the founder through three other successors to Shree Muktajivandasji Swaminarayan ("Muktajivandasji"). Until the 1940s he was a sadhu in the Ahmedabad temple, which followed the principle of lay succession. At that time he broke away from the Ahmedabad temple and declared himself to be the true successor. His group established a temple in Maninagar, Ahmedabad. That was and remains the headquarters of the sect.

In the late 1940s it became part of the beliefs of that group that he was himself the re-incarnation of the founder and had acquired divine status. It is common ground between the parties before me that the word Acharya (meaning "leader") is properly used to denote the founder's successors down to and including Muktajivandasji; and that the faith as it was understood by those who established the 1967 trust required recognition both of the supreme authority of these Acharyas and that they were "invested with divine attributes". The sect has a large following in India and much smaller groups elsewhere in the world, particularly East Africa, England and the USA.

4. The 1969 Constitution was promulgated by Muktajivandasji, with the approval of the sadhus and a committee of lay members, to deal with various matters relating to the management of the sect and in particular with the question of succession. It governs the community of the saints in the temple at Maninagar and is, as I understand it, the authoritative document governing the succession to the Acharyas and the status of such successors. In a preface to the Constitution it is stated that Muktajivandasji had laid down in the Constitution guidelines and limitations for future religious heads “that the successor may be given respect but not more than that which was given to the Oriental Religious Head”. Clause 7 provides that Muktajivandasji -

It provides that, among his other privileges, he is to make appointments of his successor in office and of members of the "Helping Committee". Clause 8 is headed "Successor in office from time to time of the mandal." It provides that any member appointed as successor by the Acharya shall be deemed his successor in office and shall have the right in turn to appoint his own successor. Clause 8 (14) deals with misconduct of a successor. It provides

in such circumstances and on aforesaid reasons, such successor in office from time to time shall be deemed unworthy to hold that office; and automatically of itself he will be deemed as removed from the office of the successor; and for the purification of his soul and if such successor in office confesses his guilt, such penance as may be decided by the Helping Committee shall be observed/suffered/undergone by such successor; and he is bound to undergo the said penance. However, if such a successor in office disregards the said decision of the Helping Committee and does not abide by it, the Helping Committee shall call a general meeting of the members of this congregation and if two thirds of the members present in such a meeting vote for removal such successor from his office, that shall be done. In such contingency a new successor in office shall be appointed in accordance with para 8 (3) of this Constitution....".

“In 1985 the members of the sect both in India and in England split into two groups, the principal cause in division being allegations of misconduct made against the Successor arising out of events during his visit to England in 1984. A majority of members in India and England did not accept the allegations against the Successor. They continue to recognise his authority, and his divine status. The minority believed the allegations were true and that he had lost his right to the succession. They have not sought to assert that there is any other person enjoying the status of Successor to Muktajivandasji.”

6. The two groups into which the adherents of the faith divided have conveniently been referred to as the Majority Group and the Minority Group and I will so describe them. One of the trustees, Mr Premji Devraj Varsani, is a member of the Majority Group. The other two trustees, Mr Jinabhai Ramji Jesani and Mr Mavji Karsan Patel, are members of the Minority Group. These appeals arise in two separate proceedings each of which was authorised by the Charity Commissioners. The first were commenced in 1988 by the Majority Group seeking the removal of the trustees who were members of the Minority Group and a scheme for the administration of the Charity. The second were commenced in 1990 by the Minority Group. They sought declarations that the Successor had ceased to be the spiritual leader of the sect and that those who continued to accept him as their spiritual leader were not entitled to worship in the London Temple or otherwise to have the use and benefit of the assets of the Charity. They too sought a scheme for the administration of the Charity.

7. In June 1990 the Majority Group sought a stay of both sets of proceedings pending the resolution of parallel proceedings in India. In late 1996 and early 1997 discussions with a view to the overall settlement of the differences between the Majority Group and the Minority Group broke down. On 18th March 1997 the Majority Group issued a summons in the proceedings commenced by them in 1988 seeking a scheme for the administration of the property of the Charity cy-près on the ground set out in s.13(1)(e)(iii) Charities Act 1993 or on such other footing as the court thought fit. By an order of the Master made on 27th March 1997 the Minority Group were given until 1st May 1997 to file their evidence in answer to the evidence of the Majority Group in support of their application. On 10th April 1997 Rattee J, who was evidently concerned at the lack of progress in the proceedings as a whole, ordered that the summons for a scheme be heard with the summonses for a stay then fixed for hearing on 21st April 1997. Thus the summons for a scheme, together with the summonses for a stay of proceedings, were heard by Carnwath J on 21st to 24th April before the time limited for the affidavit evidence of the Minority Group had expired.

8. In his judgment Carnwath J recorded that there was no dispute as to the principles on which the sect was founded, but that there was a difference, at least by way of emphasis, in relation to successors which had not been apparent before the events of 1984. He observed that the Majority Group contended that the decision of the Helping Committee made on 14th March 1985 concluded the matter, but that the Minority Group disagreed on the basis that the decision of the Helping Committee was not validly made and anyway was not conclusive. He accepted that the purpose of the Charity was to promote the faith of the Muktajivandasji sect as taught by Muktajivandasji in 1967 and thereafter during his lifetime so as to include the provisions of the 1969 Constitution. He considered that the question was whether the position taken by either group represented such a departure from such faith as to take it outside the scope of the Charity.

9. The judge acknowledged that the evidence revealed two particular issues, namely, whether belief in the divinity of a successor of Muktajivandasji or in the identity of any particular successor was fundamental. But he did not consider that it was necessary to decide either of them because the status of the successor was not a matter of fundamental principle before the events of 1984. His conclusion was

“The true view of the matter, as it seems to me, is that the sect has divided in a way which was not, and could not have been, contemplated by those concerned at the time the trust was set up. They established the trust for the benefit of what was then a unified sect. It has since become a divided sect, and it is not a division which can be healed by the decision of any civil court, certainly not an English court. Whether it may be healed by events in the future, such perhaps as the death of the present successor, is not something upon which it is useful to speculate. The court has to deal with the problem as it is today. Both groups continue to subscribe to the essential tenets of the faith as they were seen by the 1967 founders, but for reasons which are entirely outside the contemplation of the founders, they are unable any longer to worship together. The court is unable to resolve those differences as a matter of faith, but it is able to make a scheme regulating the conduct of the charity to deal with the new situation which has arisen. In my view, a further inquiry would simply be a waste of time and expense. The court has sufficient information to be able to hold that there is no fundamental departure by either side from the fundamental tenets as understood by the founders of the charity. The court has jurisdiction to make a regulatory scheme in accordance with the principles discussed above.”

“I would have to consider in more detail the jurisdiction under section 13 [Charities Act 1993]. In my view, the circumstances would fall within paragraph (e)(iii). It would then be apparent that the framework within which the faith was practised in 1967, as amplified by the 1969 Constitution, had failed to provide "a suitable and effective method" of resolving the differences within the faith, and thereby enabling the property to be used in accordance with "the spirit of the gift". [Counsel for the Minority Group] disputes this approach. He says that the original purposes can still be carried out, once it is decided which of the two contending factions are "true adherents" to the faith. The fallacy of this approach, as it seems to me, is that it assumes the possibility of the court deciding that issue in a way which will bind the adherents as a matter of faith. The court does not have that power.”

11. The Minority Group contend that the judge was wrong. They submit that the essential question is one of fact, namely, did either group cease to profess the faith for the promotion of which the Charity was established. They submit that the answer to that question can and should be determined by enquiries directed by the court. The first such enquiry would be to ascertain what were the essential tenets of the faith for the promotion of which the Charity was established. The second would be directed to ascertaining whether either or both the Majority and Minority Groups now ascribe to those beliefs. The Minority Group submit that if the answer to the essential question is in the affirmative then the court has no jurisdiction to order a scheme. An administrative scheme would not be possible for a division of the assets between the two groups would be to alter the purposes of the Charity in relation to the group which no longer ascribed to the tenets of the faith as they existed at the time the Charity was established. A cy-près scheme would not be authorised by s.13 Charities Act 1993 because, given the existence of one group whose members continue to profess the requisite faith, there are no circumstances to warrant a change in purpose so as to accommodate the other group and, indeed, it would be contrary to the spirit of the gift to do so.

12. The Majority Group support the decision of the judge but rely primarily on the jurisdiction to order a cy-près scheme pursuant to the jurisdiction conferred by s.13(1)(e)(iii) Charities Act 1993. They submit that the exercise of such jurisdiction obviates the need to enter into the question whether either group has ceased to profess the faith which the Charity was established to promote, even if, which they dispute such questions are justiciable by this court. In addition they submit that the judge was right to conclude that there was no further evidence which could throw light on the question whether either group had ceased to profess the relevant faith for the original founders expressed no view, because the issue had not arisen, on the importance of that which now divides the two groups. In those circumstances, they submit, the judge was right to decide that he had jurisdiction which he ought to exercise to order an administrative scheme for there was no basis on which he could determine that either group no longer professed the relevant faith.

13. The Attorney-General suggests that the issues which divide the two groups are whether a belief in a particular successor to Muktajivandasji or in the divine attributes of a successor are essential tenets of the faith. He suggests that these questions must be answered before the court can order a scheme. Though the Attorney-General is concerned at the cost likely to be involved in ascertaining the answers to those questions that is not his only concern. He emphasises the importance of not deterring potential charitable donors by what might be considered an over-willingness of the court to alter the objects of their beneficence. He stresses that the Attorney-General and the court are agnostic in the sense that all religious charities are treated alike irrespective of the nature of the faith they are established to promote. He submits, in the light of all these considerations, that the court cannot decide whether or not to exercise the jurisdiction conferred by s.13 Charities Act 1993 before it has ascertained precisely what the original purposes of the charity are. Once the precise objects are ascertained then, as is submitted, it will be seen that there is no justification for making a scheme because the original purposes of the Charity may be fully implemented in favour of those who still profess the original faith.

14. It is convenient to start by considering the nature of the cy-près jurisdiction and how it has developed in relation to indefinite gifts to charity which have once taken effect. In such a case the directions given by the donor as to how, that is to say the purpose for which, the property was to be applied were regarded as subsidiary to the charitable intention so as to justify overriding them when appropriate. But the circumstances in which it was considered appropriate to do so were originally confined to those where it was demonstrated that the original purpose had become impossible or impractical to carry out. In the nineteenth century, at least, impossibility or impracticality were narrowly defined. In cases where impossibility or impracticality was shown then the court had jurisdiction to alter the original purpose indicated by the donor to another, charitable, purpose as close as possible to the original purpose. The Committee on the Law and Practice relating to Charitable Trusts reported (1952 Cmd 8710) that the witnesses who had appeared before them were practically unanimous on the need to relax the rigour of the cy-près doctrine and themselves recommended a relaxation.

16. In my view when reading the old cases and considering the applicability today of the principles they embody it is essential to remember the narrowness of the cy-près jurisdiction which then existed. In Craigdallie v Aikman Lord Eldon was concerned in 1813 with a chapel acquired with the subscriptions of a congregation which seceded from the Church of Scotland in 1737 and subsequently split over whether a magistrate might suppress heresy. Each of the rival groups claimed that the chapel belonged to them. Lord Eldon expressed the view (I Dow 16) that he had met no case that would enable him to say, that the adherents to the original opinions should, under such circumstances, for that adherence forfeit their rights. Enquiries were directed which were subsequently explained by Lord Eldon (II Bligh 539) on the basis that

“..we acted upon this principle, that if we could find out what were the religious principles of those who originally attended the chapel, we should hold the building appropriated to the use of persons who adhere to the same religious principles; and in that view, it became necessary to determine whether any, and if so, which of the persons, who were contending for the use of this place of worship, adhered to or had ceased to adhere to those which were originally the religious principles which led to the establishment of this place of worship, with a view to determine what was to be done if the right principle was to appropriate the building to those who continue to hold those religious principles, and were in communion with those who did so.

17. In A-G v Pearson (1817) 3 Mer.353 a similar question arose in relation to a protestant dissenters meeting house in Wolverhampton declared by a trust deed to be held for “the worship and service of God”. The issue was the nature of the worship denoted by those words and the occasion was the ejection of a minister. Referring to Craigdallie v Aikman , Lord Eldon said, at page 418

“..if any persons seeking the benefit of a trust for charitable purposes should incline to the adoption of a different system from that which was intended by the original donors and founders; and if others of those who are interested think proper to adhere to the original system, the leaning of the Court must be to support those adhering to the original system, and not to sacrifice the original system to any change of sentiment in the persons seeking alteration, however commendable that proposed alteration may be.”

“My Lords, I disclaim altogether any right in this or any other civil court of this realm to discuss the truth or reasonableness of any of the doctrines of this or any other religious association, or to say whether any of them are or are not based on a just interpretation of the language of scripture, or whether the contradictions or antinomies between different statements of doctrine are or are not real or apparent only, or whether such contradictions do or do not proceed only from an imperfect and finite conception of a perfect and infinite Being, or any similar question. The more humble, but not useless function of the civil court is to determine whether the trusts imposed upon the property by the founders of the trust are being duly observed. .... The question in each case is what were the religious tenets and principles which formed the bond of union of the association for whose benefit the trust was created? ....."

19. It is common ground that the faith the Charity was established to promote is that of Swaminarayan according to the teaching and tenets of Muktajivandasji. It is also common ground that until 1984 both the Majority and Minority Groups professed that faith. It is the case for the Minority Group that the Majority Group no longer does so because, so it is alleged, the 1969 Constitution provided that no successor should be treated as divine, that the Successor claims to possess divine attributes and the Majority Group continue to give him their allegiance, notwithstanding that claim. The Majority Group consider that the Minority Group have departed from the true faith because they do not accept as a fundamental tenet the authority and divine attributes of the Successor. Founding himself on the three cases to which I have referred Counsel for the Minority Group submits that the court is bound to direct the two enquiries I have mentioned so as to ascertain whether either the Majority or the Minority Group still profess the faith for the promotion of which the Charity was established. He criticises the judge for referring to the decision of the House of Lords in General Assembly of Free Church of Scotland v Overtoun [1904] AC 515 as “an analogy [which] cannot be carried too far” or as “in a sense the antithesis of the present” case.

20. But for the jurisdiction conferred by s.13 Charities Act 1993 there would be much to be said for the submission for the Minority Group. It could not be said that it was either impossible or impractical to carry out the purposes of the Charity so long as either or both of the groups professed the faith of Swaminarayan according to the teaching and tenets of Muktajivandasji. Accordingly it would be essential to obtain the answers to the enquiries proposed by the Minority Group. If either group continued to profess that faith then there would be no jurisdiction to make a cy-près scheme. In that event the court would have no proper alternative to making orders limiting the use of the facilities afforded by the Charity to the members of that group to the exclusion of the members of the other group. Though the parties did not agree how much it would cost to obtain the answers to the proposed enquiries nor how much would have to be paid out of the funds of the Charity it cannot be denied that the expenditure on costs and the burden of costs falling on the Charity would be substantial.

21. For the Majority Group it is submitted that the proposed enquiries are unnecessary for if the differences between the beliefs of the two groups are different from the faith of Swaminarayan according to the teachings and tenets of Muktajivandasji and are fundamental then this case now falls within s.13(1)(e)(iii). Counsel for the Majority Group points out that the jurisdiction conferred by s.13(1) does not depend on whether or not the original purposes have failed in the sense of becoming impossible or impractical but on whether the case falls within one or more of the pigeon-holes, as he graphically described them, provided for by paragraphs (a) to (e). The pigeon-hole on which he relies is (e)(iii). In short his submission is that the original purpose was to promote the faith of Swaminarayan according to the teachings and tenets of Muktajivandasji by providing facilities for the adherents to that faith in Hendon. That purpose is no longer a suitable and effective method of using the property available by virtue of the gift because the adherents are now divided into two groups each of which conscientiously believes that they alone are continuing to profess such faith. The impasse cannot be resolved by the teachings of Muktajivandasji because the present issue did not arise in his lifetime, nor by the Helping Committee or the court because neither side can be made to accept the decision of either. Quite apart from the inevitable expenditure on costs to which the present schism will otherwise ultimately lead one group of original adherents is unprovided for due to their exclusion from the Temple and the other facilities the Charity can provide.

22. For my part I would accept this submission for substantially the reasons advanced by Counsel for the Majority Group. I would reject the submission of Counsel for the Minority Group and for the Attorney-General that the judge was, in effect, bound by Craigdallie v Aikman , A-G v Pearson (1817) 3 Mer.353 or General Assembly of Free Church of Scotland v Overtoun [1904] AC 515 to direct comparable enquiries in this case to those directed in one or more of those cases. In those cases the answers to the enquiries were necessary in order to ascertain both whether there was jurisdiction to make a cy-près scheme and how to enforce the existing trusts if there was no such jurisdiction. That dual purpose does not exist in this case or any comparable case arising since the enactment of s.13 Charities Act 1960. Now the jurisdiction to make a cy-près scheme depends on whether the case falls within one or other of the paragraphs of s.13(1). The relevant test in this case is now whether the original purpose has ceased to provide a suitable and effective method of using the property...regard being had to the spirit of the gift.

23. In my view that test is satisfied in this case. First, there is no doubt what the original purpose of the Charity was and is. It was and is the promotion of the faith of Swaminarayan according to the teachings and tenets of Muktajivandasji. Second, until the problems disclosed by the events of 1984 arose those original purposes were both suitable and effective as a method of using the property for both the Majority and Minority Group were agreed on all relevant matters and therefore able to worship together in the Temples provided by the Charity. Third, the exposure of differing beliefs by the events of 1984 has produced a situation in which neither group is able to worship in the same Temple as the other so that the Minority Group has been excluded from the facilities for the worship the Charity was established to provide. Fourth unless the impasse can be resolved as a matter of faith, so that both groups reunite to embrace the faith the Charity was established to promote, the impasse will remain so long as the original purpose remains. Fifth the impasse cannot be resolved as a matter of faith because the teachings and tenets of Muktajivandasji did not deal with whether a belief in a particular successor to Muktajivandasji or in the divine attributes of a successor were or are essential tenets of the faith. I do not accept that the parts of the 1969 Constitution on which Counsel for the Minority Group relied resolve the question. And a decision of the Helping Committee or this court is not binding as a matter of faith. Thus the impasse and the original purpose of the Charity go together. If the original purpose leads in the present circumstances to such an impasse then in my view it is self-evident that the original purpose has ceased to be a suitable and effective method of using the available property.

24. The court is enjoined by s.13(1)(e)(iii) to have regard to the spirit of the gift. In my view it does not matter whether the origin of that concept is to be found in Re Camden’s Charity [1881] 28 Ch.D.310, 333, as suggested by counsel for the Attorney-General in Re Lepton’s Charity [1972] Ch 276, 283, or in s.15 Educational Endowments Act 1882 as indicated in the Report of The Committee on the Law and Practice relating to Charitable Trusts to which I have already referred and suggested by counsel for the Majority Group in this case. Either way the concept is clear enough, namely, the basic intention underlying the gift or the substance of the gift rather than the form of the words used to express it or conditions imposed to effect it. It is noteworthy that the phrase is used in s.13(1) only in contexts which require the court to make a value judgment. Thus it does not appear in paragraphs (a)(i), (b), (e)(i) or (ii). Moreover, when it is used, in each case except one it appears in the context of suitability. The exception, paragraph a(ii), whilst not actually using the word suitable requires a similar value judgment. The court is not bound to follow the spirit of the gift but it must pay regard to it when making the value judgments required by some of the provisions of s.13(1).

25. For my part I have no hesitation in concluding that the spirit of the gift supports the submission that the court should accept and exercise the jurisdiction conferred by s.13(1)(e)(iii) by directing a scheme for the division of the property of the Charity between the Majority and Minority Groups. The choice lies between directing such a scheme for the benefit of all those who down to 1984 shared the belief for the promotion of which the Charity was established and, no doubt, in many cases supported the Charity financially as well, even though some of them may no longer do so, and requiring a substantial proportion of the trust property to be spent in litigation which can never finally resolve the problems which divide the two groups. I do not minimise the strength of feeling which arises in connection with disputes such as this. In such cases either or both groups often litigate in preference to permitting a benefit to be conferred on the other. But the spirit of the gift to which the court is to have regard is that which prevailed at the time of the gift when the two groups were in harmony.

26. Accordingly I would reject the submissions of both the Minority Group and the Attorney-General. First, it is not necessary to ascertain the precise limits of the purpose of the charity before deciding whether the case comes within s.13(1). The purpose of this Charity is clear; it is the promotion of the faith of Swaminarayan according to the teaching and tenets of Muktajivandasji. It is the expression of that purpose in the light of subsequent events which has given rise to the schism with the result that the original purpose has ceased to be a suitable and effective method of using the trust property. Second, it is not a necessary condition for the application of the section that the original purposes have become impossible or impractical, only that the circumstances come within one or other paragraph of s.13(1). Thus even if the enquiries sought were ordered and pursued and ultimately demonstrated that the Minority Group but not the Majority Group still embraced the relevant faith that does not now preclude the application of the section for the outcome of the enquiries would merely demonstrate that the original purpose was not impossible or impractical.

27. If, as I would hold, there is jurisdiction to make a scheme under s.13(1)(e)(iii) that is good reason for not ordering the enquiries suggested by the Minority Group. Such enquiries would show either that one of the groups no longer professed the relevant faith or both of them still did. For the reasons I have tried to explain the former alternative is irrelevant to the question of jurisdiction to make a cy-près scheme. But if the answer were that both groups still professed the relevant faith then it would be permissible to make an administrative scheme for no alteration of the purpose of the Charity would arise. The justification for such a scheme would remain the same, namely to resolve the impasse and avoid the expenditure on costs. Therefore whatever the answers to the proposed enquiries there would be jurisdiction to make the proposed scheme and the same factual justification for doing so.

28. It also follows from these conclusions that the fact that the evidence for the Minority Group had not been completed when the matter was heard by Carnwath J was no impediment to the judge making the order he did. I do not agree with him that the court had sufficient information to be able to hold that there was no fundamental departure by either side from the fundamental tenets as understood by the founders of the Charity. But the court did have sufficient information to ascertain that it did not need to resolve that question before ordering the proposed scheme in exercise of either its cy-près or administrative jurisdiction.

29. In rejecting the submissions for the Attorney-General I do not seek to undermine or belittle in any way the concerns expressed by his counsel to which I have already referred. First there is his concern that potential donors should not be deterred by a belief that their intentions will be overridden by a too ready use of the cy-près jurisdiction. I agree; but that problem has to be set beside the equal but opposite problem that in circumstances unforeseen by the donor his or her bounty may not achieve all that was intended or was reasonably feasible. The balance between those two considerations has to be struck and was struck by Parliament in 1960 when, following the Report of the Committee to which I have referred, it enacted s.13 Charities Act 1960. Since then it has been the duty of the court fairly to apply the provisions of that section to the circumstances of each case without any predilection either to making or to refusing to make a scheme altering the original purposes of the charity.

30. The Attorney-General’s other concern was that no faith should be treated in relation to the law of charity differently from any other. This is fundamental. The law of charity does not now favour one religion to another. The proposition was authoritatively explained by Lord Reid and applied in Gilmour v Coats [1949] AC 426. As I understood it the concern arose from the belief that if the enquiries sought by the Minority Group were refused but a scheme as sought by the Majority Group were ordered that would indicate some difference in the treatment afforded to the two groups in this case when compared with the treatment of comparable groups in Craigdallie v Aikman , A-G v Pearson (1817) 3 Mer.353 or General Assembly of Free Church of Scotland v Overtoun [1904] AC 515. It is true that the treatment of the groups would be different but that arises from the fact that since those three cases were determined Parliament has enacted s.13 Charities Act 1960. The difference in the result is not due at all to the fact that the earlier cases concerned different faiths.

It has been common ground that, as so stated, the objects are insufficiently defined. The faith which the charity was established to promote was the faith of Swaminaryan as practised in accordance with the teachings and tenets of Muktajivandasji. The disagreement between the majority and minority groups represented in these proceedings is as to what those teachings and tenets require in circumstances which arose following the death of Muktajivandasji in 1969 and which were not foreseen during his lifetime; in particular, in the circumstances that his chosen successor has become unacceptable to the minority group for the reasons described by Mr Justice Carnwath in the judgment now under appeal. The effect of the disagreement is that the London Temple, which comprises the major asset of the charity, can no longer be used by either group in harmony with the other; with the consequence that it is now used by the majority group to the exclusion of the minority group.

Before the enactment of the Charities Act 1960 the Court would have had no alternative other than to resolve the question which (if either) of the opposing views now held by the majority group and the minority group respectively do truly reflect the teachings and tenets of Muktajivandasji in the circumstances which have arisen. There are, in principle, four possible answers to that question: (i) that the views of both groups continue to reflect the true faith, the differences between them not being such as to represent any fundamental departure by either from the teachings and tenets of Muktajivandasji; (ii) that the views of the majority group reflect the true faith and the views of the minority group do not; (iii) that the views of the minority group reflect the true faith and the views of the majority group do not; and (iv) that the views of neither group any longer reflect the true faith, both having misunderstood (and so departed from) the teachings and tenets of Muktajivandasji.

The Judge was attracted to the first of those answers. He held that the Court had sufficient information to enable him to hold that there had been no fundamental departure by either group from the tenets as understood by the founders of the charity. It is, I think, common ground that, if the Judge was right to take that view, then he had the jurisdiction which he purported to exercise; that is to say, jurisdiction to make a regulatory or administrative scheme. But, in common with Lord Justice Morritt, I find it impossible to support the Judge’s view that he could properly decide, on the material before him, that there was no fundamental departure by either group from the true faith. That may, indeed, be the position; but it is not possible to decide that without a much more detailed enquiry than that which could be conducted on the present material.

It is also, I think, common ground that if it were to be found that the views of neither group do any longer represent the true faith - both having misunderstood the teachings and tenets of Muktajivandasji in some fundamental respect - then, both under the law as it stood before the Charities Act 1960 and under the Act itself, the Court would have jurisdiction to direct a scheme cy-pres. In those circumstances it would be plain that the original purposes of the charity could not be carried out. There is no third group who could be held to have adhered to the true faith and for whose benefit the Temple could be used. But it is not, of course, contended by either group that the Court can act on the basis that this fourth possible answer is correct.

If the question which, if either, of the views now held by the majority group and the minority group respectively do truly reflect the teachings of Muktajivandasji in the circumstances which have arisen were to be resolved in favour of either group - that is to say, if the answer to that question were either (ii) or (iii) above - then, under the law as it stood before the Charities Act 1960, the Court could not direct a scheme, either cy-pres or in the exercise of the administrative jurisdiction. This is because it would still be possible to carry out the original purposes of the charity through the use of its property by the group who (on this hypothesis) had been found to be the adherents to the true faith; and any application of any part of the property for use by the other group would be open to attack as a breach of trust. It is for that reason that, under the old law, the Court would have been required to decide the underlying question.

The position has been altered by the enactment of the Charities Act 1960. Section 13(1)(e)(iii) empowers the Court to direct a scheme cy-pres: "where the original purposes, in whole or in part, have, since they were laid down, . . . ceased . . . to provide a suitable or effective method of using the property available by virtue of the gift, regard being had to the spirit of the gift."

That provision, as it seems to me, enables the Court to consider, as preliminary questions, (i) whether, if the underlying question which (if either) of the views now held by the majority group and the minority group respectively do truly reflect the teachings and tenets of Muktajivandasji in the circumstances which have arisen were to be resolved in favour of one group and against the other, the position would then be that the original purposes had ceased to provide a suitable or effective method of using the property available by virtue of the gift regard being had to the spirit of the gift ; and, if so, (ii) whether it would then be appropriate to make a scheme cy-pres. If those preliminary questions are answered in the affirmative then it is unnecessary to resolve the underlying question which (if either) of the views now held by the majority group and the minority group do truly reflect the teachings and tenets of Muktajivandasji in the circumstances which have arisen: unnecessary because, whichever of the four possible answers to that underlying question proved correct, the Court would have power to direct a scheme - either cy-pres or under its administrative jurisdiction - and would exercise that power.

I agree with Lord Justice Morritt that, if the underlying question which (if either) of the views now held by the majority group and the minority group respectively do truly reflect the teachings and tenets of Muktajivandasji in the circumstances which have arisen were to be resolved in favour of one group and against the other, the position would be that the original purposes had ceased to provide a suitable and effective method of using the property available by virtue of the gift. It is not, of course, the case that the property could not be used in accordance with the original purposes. Clearly it could be so used by the group who were found (on this hypothesis) to be the followers of the true faith. But to appropriate the property to the sole use of one group, to the exclusion of the other, would not - in a case like the present - be a suitable and effective method of using that property, regard being had to the spirit of the gift.

The need to have regard to the spirit of the gift requires the Court to look beyond the original purposes as defined by the objects specified in the declaration of trust and to seek to identify the spirit in which the donors gave property upon trust for those purposes. That can be done, as it seems to me, with the assistance of the document as a whole and any relevant evidence as to the circumstances in which the gift was made. In the present case I have no doubt that the spirit in which property was given in 1967 was a desire to provide facilities for a small but united community of the followers of Muktajivandasji in and around Hendon to worship together in the faith of Swaminaryan. The original purposes specified in the declaration of trust - that is to say the promotion of the faith of Swaminaryan as practised in accordance with the teachings and tenets of Muktajivandasji - are no longer a suitable and effective method of using the property given in 1967 (or added property held upon the same trusts) because the community is now divided and cannot worship together. Nothing that the Court may decide will alter that. To hold that one group has adhered to the true faith and that the other group has not will not alter the beliefs of that other group. The position will remain that the community cannot worship together. To appropriate the use of the property to the one group to the exclusion of the other would be contrary to the spirit in which the gift was made.

It follows that there would be jurisdiction to make a scheme cy-pres even if the underlying question which (if either) of the views now held by the majority group and the minority group respectively do truly reflect the teachings and tenets of Muktajivandasji in the circumstances which have arisen were to be resolved in favour of one group and against the other. Given jurisdiction, it would plainly be appropriate to make a scheme. To refuse to do so would be to perpetuate a position in which the property of the charity is no longer being used in a suitable and effective manner. This, therefore, is a case in which the two preliminary questions which I have identified are answered in the affirmative; and so it is unnecessary to resolve the underlying question. Whichever of the four possible answers to that question may be correct, there is power to direct a scheme. The Judge was right to do so.

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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Varsani & Ors v Jesani & Ors [1998] EWCA Civ 630 (3 April 1998) URL: http://www.bailii.org/ew/cases/EWCA/Civ/1998/630.html Cite as: [1998] 3 All ER 273, [1998] EWCA Civ 630

England and Wales Court of Appeal (Civil Division) Decisions