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The St Margaret’s Adoption Society Appeal Case

The St Margaret of Scotland Adoption Society was formed in 1955 by the Roman Catholic Church and was recognised as a charity both by HMRC and OSCR. It underwent various changes and was incorporated in its present form as a Company limited by Guarantee in January 1999.
The main objects in its Memorandum were “The Society is established to promote (irrespective of creed) the welfare of children, whose interests are paramount, to foster the stability of family relationships and to assess the suitability of applicants as adoptive parents all in accordance with the teachings of the Catholic Church….”  The Society had issued its policies and procedures which set out its aims and objectives including “to provide a Catholic, comprehensive, independent adoption service to birth parents, babies and children and adoptive parents under the Adoption and Children (Scotland) Act 2007 and especially those who wished to do so within the framework of their faith and to offer an adoption service which is concerned for the spiritual care of service users routed in the Catholic tradition.”
In January 2013, following on a complaint from the National Secular Society and an enquiry by OSCR, OSCR issued a direction under section 30 of the Charities and Trustee Investment (Scotland) Act 2005. The direction issued by OSCR required the Society to amend its external statements, internal guidance and procedures so that the assessment requirements were clear and transparent and fully compliant with the Equality Act. The Adoption Society lodged an Appeal and on review it was held that the Society had failed the charity test because the disbenefit arising from unlawful discrimination outweighed the benefit provided by them and the direction was confirmed. This was then appealed to the Scottish Charities Appeal Panel who then reviewed the situation and the key outcomes from the review would appear to be as follows.
As had been clear for some time, compliance with the equality legislation and the equality agenda was regarded by the Regulator as a fundamental part of compliance with the public benefit test. The terms of the Act state that in determining whether a body provides or intends to provide a public benefit, regard must be had to
“(a) how any –

benefit is gained or likely to be gained by members of the body or other persons (other than as members of the public); and

disbenefit incurred or likely to be incurred by the public in consequence of the body exercising its function compares with the benefit gained or likely to be gained by the public in that consequence, and

(b) where the benefit is or is likely to be provided to a section of the public only where any condition on their obtaining that benefit (including any charge or fees) are unduly restrictive.”
There had been a growing feeling that the issue of equality was becoming the all pervasive test of public benefit. In the course of the argument before the Appeal Panel it was pointed out that the Society had not been convicted under the Equality Act and in fact following on the detailed argument, the view of the Panel was that the Society was not in fact in breach of the terms of the Equality Act. Their view was the discrimination was indirect. They then went on to consider whether it was “a proportionate means of `achieving a legitimate aim”. The Panel’s view was that the aim of providing a Catholic adoption service available to Catholic children was legitimate and that it was also proportionate because if they were not carrying out their service there would be no Catholic Adoption agency providing a service for Catholic children enabling them to be brought up in the Catholic faith.
The Panel took the view that it was arguable that the OSCR should not put itself in the place of another` regulatory body. The main point however was that public benefit should be assessed in light of all the activities of the charity. 
In this particular instance it was clear, from its objects which had been amended relatively recently and accepted by OSCR, that the Society was a religious body as well as providing adoption services. This was an important part of the consideration. From a practical point of view it was also noted that the services were financed through funding from the Catholic Church and without that funding the Society would be able to operate.  It was argued that it was an adoption society and was not founded for the advancement of religion. This narrow view of what was a religious body was rejected and it was pointed out that the exercise of the Christian religion involved carrying out activities such as were provided by the Adoption Society. This was significant both in considering whether or not the Society had breached the terms of the Equality Act and also as to whether it had been established for the promotion of religion.
The Panel also addressed the Convention on Human Rights and considered whether or not the terms had been breached by OSCR. Article 9 protects the freedom of thought, conscience and religion. There was debate over whether a corporate body could have thought and religion. The Panel disagreed with the view that a corporate body could not have a religion. The Panel then went on to consider the rights of the adopter and the terms of Article 14 relating to the prohibition of discrimination. The Panel agreed that prospective adopter had Article 14 rights. However the Adoption Society was not a public body and therefore is was not bound by the Human Rights Act.
In assessing the public benefit the Regulator also had taken the view that the teaching of the Catholic Church giving priority to heterosexual married couples was not compatible with modern day Scottish life.  The Panel decided that it was not the place of the Regulator to opine on such matters.
In considering the public benefit case, the Panel took a much wider view of public benefit. They considered that it was necessary to weigh up the benefit provided by the Society in providing an adoption service which was used by Catholics and others as against the disbenefit of the restrictions that were implied. The Appeal Panel considered that the blanket policy that any breach of the Equality Act meant that the public benefit test was not met, was not correct and that any such policy should be reviewed. They went on to state that the contribution of an adoption service as part of the activities of the Society did provide a public benefit in the charity law sense of the phrase. If there had been a failure in terms of the Equality Act, this disbenefit should be considered in light of the benefit that was gained by the public. 
In our view this decision is very important as it does emphasise that there is no one matter that can simply be applied to establish whether or not the public benefit criteria has been met. It is acknowledged that there is a specific obligation in terms of the Charities and Trustee Investment (Scotland) Act 2005 on OSCR to carry out its functions in a manner that encourages equal opportunities and in particular the observance of the equal opportunity requirements (section 1(8)). This however does not mean that it is the only criteria and that a broader view of the benefit and disbenefits should be taken. 
One of the other interesting outcomes is the view that the promotion of religion is wider than merely holding services and carrying out religious rites. This also includes carrying out social work such as the Society did and can justifiably be considered as part of the promotion of religion.
The full implications of this decision remain to be seen. However the decision itself is important and merits careful consideration. We expect that the case will have major ramifications on how the public benefit test is perceived and applied and we look forward to the ongoing developments.