This paper sets out for consultation the proposal to make an order under section 41 of the Trustee Act 2000 to amend Schedule 2 to the Methodist Church Act 1976.
The proposed order would result in the application of the trustee investment provisions of the 2000 Act to the those trust funds held upon the Model Trusts of the Methodist Church. This would broaden the powers of the Trustees for Methodist Church Purposes to make trust fund investments in England, Wales and Scotland.
The consultation is primarily aimed at those people or groups the Lord Chancellor believes to be affected by the proposed amendment, as provided in section 41(2) of the 2000 Act. This consultation is being conducted in line with the Code of Practice on Written Consultation issued by the Cabinet Office, the general principles of which are listed in the final section of this document.
An initial impact assessment indicates that only the Methodist Church and its members will be affected by the proposed amendment. The proposal is unlikely to lead to additional costs and savings for businesses, charities or the voluntary sector. The main impact of the order sought will be to allow the Trustees greater scope to make investments on behalf of the Church. While this may lead to an increase in work for them, and a possible commensurate addition to the costs they incur, it is submitted that these will be negligible. For this reason, a regulatory impact assessment has not been done.
Copies of the consultation paper are being sent to the members of the Methodist Church Council as of April 2003.
Please send your response by 2nd July 2003 to:
Mark Farrow
Lord Chancellor's Department
Civil Law Development Division
Room 3.05
Southside
105 Victoria Street
London SW1E 6QT
Tel: 020 7210 1202
Fax: 020 7210 1269
Email: Mark Farrow
We would appreciate receiving responses by email in MS Word format if possible.
Representative groups are asked to give a summary of the people and organisations they represent when they respond.
The Department may wish to publish responses to this consultation document in due course. Please ensure your response is marked clearly if you wish your response or your name to be kept confidential. Confidential responses will be included in any statistical summary of numbers of comments received and views expressed.
Further copies of this consultation paper can be obtained from Mark Farrow at the above address or by phoning 020 7210 1202.
There are three Acts of Parliament relevant to the proposal:
When reference is made to one of these Acts, it will be by year only. Relevant extracts of the three Acts are set out in Annex A.
The Board of Trustees for Methodist Church Purposes ("the Board") was constituted by the 1939 Act. Section 10 of that Act gives the Board the power to receive and hold property as trustee or custodian trustee upon trusts connected with the Methodist Church. It currently holds thousands of such properties and funds. In respect of the funds which the Board holds as trustee, it is able to exercise the general power of investment conferred by section 3 of the 2000 Act.
However, there are a considerable number of funds held by the Board upon the Model Trusts of the Methodist Church, which are contained in Schedule 2 to the 1976 Act. Paragraph 17 of the Model Trusts provides in particular for the relevant managing trustees to invest any moneys requiring investment in or upon any investment authorised by law for the investment of trust funds.
As the 1976 Act is "an enactment" for the purposes of section 6(1)(b) of the 2000 Act, the general power of investment under the 2000 Act is not automatically conferred upon the trustees of funds held upon the Model Trusts. Therefore they are left with more restricted investment powers than might be the case.
The Board are requesting that the Lord Chancellor make an order under section 41 of the 2000 Act amending Paragraph 17 of Schedule 2 to the 1976 Act to apply the general power of investment under section 3 of the 2000 Act. Section 41 enables any Minister of the Crown to make an appropriate amendment to an existing Act in consequence of or in connection with the 2000 Act.
The order will have the effect of enabling the Board, as trustees of funds held on the Model Trusts, to exercise the general power of investment in section 3 of the 2000 Act in relation to any of these funds. They will then be able to make any kind of investment that they could make were they absolute owners of the trust assets, subject to the trustees' duty of care set out in sections 4 and 5 and Schedule 1 of the 2000 Act. They consider this will allow them to make wider use of these funds.
Custodian trustee
A custodian trustee is a corporation appointed to have the custody, as distinct
from the management, of trust property. An individual person cannot act
as a custodian trustee. Where a custodian trustee is appointed to hold property
on trust, the day-to-day administration of the trust is left in the hands
of managing trustees.
Enactment
An enactment is an Act of Parliament, or part thereof. It can include any
bye-law or regulation taking an effect under an Act. For the purposes of
the 2000 Act, this definition includes "any provision of a Measure
of the Church Assembly or of the General Synod of the Church of England".
General power of investment
Section 3(1) of the 2000 Act gives trustees, subject to certain safeguards
and limitations, the same power to invest trust assets as if they owned
the assets outright rather than holding them on trust. This enables trustees
to hold investments jointly or in common with other persons. The power does
not however extend to investments in land other than by loans secured on
land. In exercising the power, trustees are still subject to their fundamental
duties, the duty of care in Schedule 1 of the Act, and specific duties to
have regard for the need for diversification and suitability of investments
(section 4) and to obtain and consider proper advice where appropriate (section
5).
Minister of the Crown
Section 8(1) of the Ministers of the Crown Act 1975 states "'Minister
of the Crown' means the holder of an office in Her Majesty's Government
in the United Kingdom, and includes the Treasury, the Board of Trade and
the Defence Council."
Trust and trustee
A trustee is a person who has property or rights (trust property or assets)
which he holds or is bound to exercise for or on behalf of another or others,
or for the accomplishment of some particular purpose or purposes. He or
she is said to hold the property on trust for that other or others, or for
that particular purpose or purposes.
Trusts
May be private or public (charitable). A private trust
is a trust for the benefit of an individual or class, irrespective of any
benefit which may be conferred on the public at large. A public
trust is a trust whose object is to promote the public welfare,
even if it incidentally confers a benefit on an individual or class. Charitable
trusts are public trusts solely and exclusively for purposes the law regards
as charitable.
10. Board to have power to receive and hold property upon trusts
The Board may receive and hold as trustees or as custodian trustees (...)
all leasehold and other personal estate which shall from time to time be
given devised or bequeathed or lawfully assured or transferred to them upon
or for any trusts intents or purposes connected with any of its synods districts
missions or other connexional or local organisations whether immediately
connected with chapels or not or upon or for any trusts intents or purposes
connected with any of its Sunday schools day schools or ministers' houses
or upon or for any trusts intents or purposes connected with any society
institution or charity subsidiary or ancillary to the Methodist Church other
than any real leasehold or other personal estate which immediately before
the commencement of this Act was vested or by this Act becomes vested or
may hereafter become vested in the Trustees of the National Children's Home
and Orphanage Registered.
Schedule 2 - Model Trusts
17. Investment. Subject to the provisions of this Schedule,
the managing trustees may invest any moneys requiring investment in or upon
any investment for the time being authorised by law for the investment of
trust funds or in any common investment fund or deposit fund for the time
being constituted by or pursuant to the scheme contained in the First Schedule
of the Act of 1960.
General power of investment
3.-(1) Subject to the provisions of this Part, a trustee
may make any kind of investment that he could make if he were absolutely
entitled to the assets of the trust.
(2) In this Act the power under subsection (1) is called the "general power of investment".
6.-(1) The general power of investment is-
(a) in addition to powers conferred on trustees otherwise than by this Act,
but
(b) subject to any restriction or inclusion imposed by the trust instrument
or by any enactment or any provision of subordinate legislation.
(2)...
(3)...
41.-(1) A Minister of the Crown may by order make such amendments of any Act, including an Act extending to places outside England and Wales, as appear to him to be appropriate in consequence of or in connection with Part II or III.
(2) Before exercising the power in subsection (1) in relation to a local, personal or private Act, the Minister must consult any person who appears to him to be affected by any proposed amendment.
(3) An order under this section may -
(a) contain such transitional provisions and savings as the Minister thinks
fit;
(b) make different provision for different purposes.
(4) The power to make an order under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(5) "Minister of the Crown" has the same meaning as in the Minister of the Crown Act 1975.
We would welcome responses to the following questions:
Overall, are you in favour of the proposed order being made?
Do you have any further observations about the making of the order?
Name:
Organisation:
Address:
If you are a representative group please give a summary of the people and organisations you represent.
Please send your completed response by 2nd July 2003 to:
Mark Farrow
Lord Chancellor's Department
Civil Law Development Division
Room 3.05
Southside
105 Victoria Street
London SW1E 6QT
Or email:
If you have any complaints or comments about the consultation process, you should contact the Lord Chancellor's Department's consultation co-ordinator, Laurence Fiddler, on 020 7210 8516 or email him at Laurence Fiddler. Alternatively, you may wish to write to the address below:
Laurence Fiddler
Consultation Co-ordinator
Room 8.23
Lord Chancellor's Department
Selborne House
54-60 Victoria Street
London SW1E 6QW
The criteria in the Code of Practice on Written Consultation issued by the Cabinet Office is as follows:
Timing of consultation should be built into the planning process for a policy or service from the start, so that it has the best prospect of improving the proposals concerned, and so that sufficient time is left for it at each stage.
It should be clear who is being consulted, about what questions, in what timescale and for what purpose.
A consultation document should be as simple and concise as possible. It should include a summary, in two pages at most, of the main questions it seeks views on. It should make it as easy as possible for readers to respond, make contact or complain.
Documents should be made widely available, with the fullest use of electronic means (though not to the exclusion of others), and effectively drawn to the attention of all interested groups and individuals.
Sufficient time should be allowed for considered responses from all groups with an interest. Twelve weeks should be the standard minimum period for a consultation.
Responses should be carefully and open-mindedly analysed, and the results made widely available, with an account of the views expressed, and reasons for decisions finally taken.
Departments should monitor and evaluate consultations, designating a consultation co-ordinator who will ensure the lessons are disseminated.