As mentioned in Sunday’s round-up, last Friday it was announced that the Scottish Charity Appeals Panel (SCAP) had overturned the decision of the Office of the Scottish Charity Regulator (OSCR) that St Margaret’s Children and Family Care Society, a voluntary Roman Catholic adoption agency, was to lose its charitable status over its refusal to place children with same-sex couples. The text of the decision has now been published on the SCAP website: St Margaret’s Children and Family Care Society v Office of the Scottish Charity Regulator  Scottish Charity Appeals Panel App 02/13.
The objects of the Society as set out in its Memorandum of Association, are as follows:
“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 appealed against OSCR’s decision of 4 March 2013 which confirmed its previous decision of 22 January 2013 to issue a direction under section 30(1) of the Charities and Trustee Investment (Scotland) Act 2005 (the 2005 Act) requiring St Margaret’s to
“… amend its external statements, internal guidance and procedures and practice so as to ensure that the criteria applied to decide whether those enquiring about assessment as adoptive parents will be accepted for full assessment are clear and transparent [and] comply fully with the requirements of the Equality Act 2010 – in particular to ensure that the charity does not discriminate unlawfully in the ways set out in the accompanying section 33 report in respect of the protected characteristics of religion or belief and sexual orientation”.
St Margaret’s policies and procedures document of 2011 sets out the following among its aims and objectives:
- “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, especially those who wish to do so within the framework of their faith”;
- “to offer an adoption service which has a concern for the spiritual care of the service users, rooted in the Catholic tradition”; and
- “to prepare and assess prospective adoptive parents and to make decisions on their suitability as prospective adopters, with an emphasis on providing Catholics and others adoption and family support services within the framework of the Catholic faith”.
Although the main activity of St Margaret’s is assessing and approving potential adoptive parents it also provides other forms of support for families. The Tribunal noted that it had recently expanded its premises in order to provide further complementary family-related services, which it would not have been able to do without Church funding [para 8]. There are no service agreements between St Margaret’s and the local authorities; instead, it receives an “inter-agency fee” when, but only when, a placement occurs. It also provides post-adoption support for adoptive parents beyond the twelve months covered by the inter-agency fee; that support is neither required nor paid for by the local authority [para 14]. Overall, it is funded partly by the “inter-agency fee”, partly by the institutional Church and partly by individual donations [para 16]. Though there are other components to to its funding, the Church component is “significant” and dependent upon it being a Roman Catholic charity. Without that funding from the Church it would have to close [para 17]
The policy and procedure document states that:
“We will give preference to:
(1) Catholic couples who wish to adopt within the framework of their faith.
(2) Couples, where one of the parties is Catholic and they wish to adopt within the framework of the Catholic faith.
(3) Other couples who wish to adopt within the framework of the Catholic faith.
(4) An individual who may wish to adopt within the framework of the Catholic faith”.
Moreover: “Applicants should be couples within a stable loving relationship and have been married for at least two years”.
The “preferred criteria”
OSCR determined in its original Section 33 report (and confirmed on review) that St Margaret’s operated “preferred criteria” in assessing whether or not enquirers could go forward for full assessment. The criteria gave greater priority to prospective adoptive parents who were: members of a couple; Roman Catholic; married for at least two years; or who wished to adopt within the framework of the Roman Catholic faith. Lower priority was accorded to: enquirers who had been married for less than two years; couples in civil partnerships; single people; and married couples who did not wish to adopt within the Roman Catholic faith [para 20]. OSCR did, however, note that though St Margaret’s had not received an enquiry from or on behalf of a same-sex couple, in principle it would consider an application to be considered as adoptive parents from a couple in a civil partnership.
After a meeting between OSCR and St Margaret’s, the Society undertook to consider in more detail whether or not the charity and religious exceptions under the Equalities Act 2010 applied to it and to come back to OSCR with details of any restrictions and what exceptions applied and why. In a letter dated 23 April 2012 it stated:
” It is clear that as our policy and procedures stand at present St Margaret’s … does not operate any restrictions concerning persons who have a protected characteristic under equality legislation. Every case is considered in view of its own merits, and any decision taken by the Society is in conformity with our charitable instrument as approved by the Office of the Scottish Charities Regulator. As our policy and procedures demonstrate, the society operates a preferred criteria in the prioritisation of applications” [para 31].
Nevertheless, OSCR required St Margaret’s to amend its external statements, internal guidance and procedures and practice so as to ensure that the criteria that it applied in deciding whether those enquiring about assessment as adoptive parents would be accepted for full assessment were clear and transparent and complied fully with the Equality Act 2010, particularly in relation to unlawful discrimination in respect of religion or belief and sexual orientation [para 34].
The crunch issue for the Society was that, were it to comply with OSCR’s direction as a condition of its retaining its charitable status it could no longer, as a matter of Roman Catholic canon law, operate as a Roman Catholic charity. It would have to sever its links with the Church, lose its Church funding and have to close [para 42].
The Society’s averments
In its Grounds of Appeal the Society averred that:
- there was a fundamental procedural unfairness in the manner in which the review decision had been taken (in that the review decision was taken by the same body of persons as the original decision);
- there was no proper factual or legal basis for OSCR’s finding that disbenefit had been or was likely to be incurred by the public in consequence of St Margaret’s exercising its functions;
- there had been errors in law as to the constitutional basis on which OSCR, as a creation of the Scottish Parliament, was bound absolutely as a matter of vlres to respect the Society’s Convention rights and the fact that OSCR had purported to give precedence to the Equality Act over and against those Convention rights;
- there had been an unlawful fettering of discretion in OSCR creating and applying without statutory warrant a blanket policy to the effect the “charity test” could never be met in cases of (alleged) incompatibility with the requirements of the Equality Act;
- OSCR’s decision had been disproportionate (and hence incompatible with the ECHR and therefore ultra vires ) because it would entail the Society’s closure;
- OSCR’s failure to take into account and/or give appropriate weight to the issue of the preservation of the religious tradition of an adoptive child (and hence the relevance of specific religious observance of prospective adoptive parents) had been an error in law;
- OSCR’s holding that St Margaret’s imposed conditions or restrictions on access to “a charitable benefit” was an error in fact and in law;
- OSCR had wrongly construed and applied the relevant statutory tests in the Equality Act, in particular (i) in its misunderstanding and misapplying the “charity exemption” in s 193 and (ii) in failing to afford St Margaret’s the benefit of the “religious exemption” in paragraph 2 of Schedule 23; and
- there had been an error in law in OSCR’s construction and application of the relevant statutory tests in the 2005 Act, in particular OSCR’s failure properly to understand and apply s 8(2) of that Act in (i) giving no due consideration to the issue of “benefit gained or likely to be gained by members of the body or any other persons (other than as members of the public)” as required by s 8(2)(a)(i) and (ii) by equating the provision of (adoption) services with the provision of “public benefit” [para 43].
The conclusions of the Scottish Charity Appeals Panel
On the general issues
- on the question of procedural unfairness, the Panel held that it was contrary to the laws of natural justice that the same body or person should review its own decision and recommended that OSCR should review its procedures to ensure that reviews were carried out by a different person or persons from those who took the original decision;
- on the issue of the public benefit test the Panel was of opinion that, “when assessing the Public Benefit [OSCR] should have considered all of the activities of the Charity including those which were outwith the scope of Adoption and then weigh the benefit with the disbenefit before coming to a conclusion. There should be evidence of an objective test in so far as that is possible”. Moreover, “There was no evidence of any Private Benefit or of public harm; same-sex couples if not accepted as adoptive parents by the Appellant’s organisation for whatever reason are still able to avail themselves of other charitable activities of the Appellant ·and such couples are not prevented from using any of the other 35 Scottish adoption agencies: no-one in a same-sex relationship has complained of the Society to any regulator or regulatory agency”.
- as to OSCR’s regard for the Society’s Convention rights, OSCR had been wrong to have treated St Margaret’s purely as an adoption agency and not as a religious organisation and, as a result, to have concluded that Article 9 ECHR was not engaged. The Panel was of the view that the inclusion of the words “all in accordance with the teachings of the Catholic Church” within the objects clause of St Margaret’s Memorandum of Association, “taking into account the activities of the Charity one of whose main objectives in fact is the placing of children of the Catholic Faith who are to be adopted into homes where the Catholic Faith is taught and upheld” were sufficient to indicate that part of the establishment of the charity was the advancement of religion – and therefore to engage Article 9. The Panel also rejected the (rather specious) arguments that “a corporate body … was not capable of thought and that it was consequently not able to have a religion” and that because “the services of the Appellant were open to all irrespective of creed that meant the Appellant’s objectives were wider than the Catholic community and as a result The Appellant was unable to claim it was a religious charity”.
- As to the human rights of the prospective adopter, the Panel agreed that the prospective adopters also had Convention rights and that Article 14 ECHR was engaged.
- As to the rights of the adoptive child, the Panel concluded that Parliament had intended that the child’s religious persuasion should be taken into account in the adoption process, a matter which would itself engage Article 9. The adoptive child was also entitled to exercise his or her religion, in this case the Roman Catholic faith.
Direct or indirect discrimination?
The element of discrimination contained within the preferred criteria was that same-sex couples were unable to have been married for two years and therefore could not meet one of the criteria. The Society argued, however, that that criterion was not aimed at directly discriminating against homosexuals and those in same-sex relationships. There was no absolute ban against homosexuals; and the Society would “eg allow a same-sex couple in a civil partnership to adopt on the same basis as any other married couple”. The Society argued that the facts in the Catholic Care litigation could be distinguished, because in that case the charity had applied to the Charity Commission for England and Wales for a complete ban on homosexuals using its services. That, argued St Margaret’s, was direct discrimination in a sense which was not applicable to the present case.
The Panel noted that in Catholic Care it had been concluded that there had been direct discrimination; and the court had been right to hold that the charity could not then claim the religious exemption – which was available to a party only where it was able to show that the discrimination was a proportionate means of achieving a legitimate aim. The Panel accepted St Margaret’s contention that its “preferred criteria” were applied right up to the last part of the process.
The Panel’s view was that the Society’s preference for couples who had been married for more than two years did, in fact, discriminate against same-sex couples and homosexuals, each of whom had protected characteristics under the Equality Act. The Panel concluded, however, that this constituted indirect discrimination; moreover, the Panel also concluded that St Margaret’s attracted the charity exception under s 193 of the Equality Act and and that the indirect discrimination was a proportionate means of achieving a legitimate aim: “to be a faith based organisation and to manifest that faith inter alia in an adoption service and to ensure that Catholic adoption is available to Catholic children”.
Equally, the exception in paragraph 2(10) of Schedule 23 for “anything which is prohibited by section 29, so far as relating to sexual orientation, if it is done—(a) on behalf of a public authority, and (b) under the terms of a contract between the organisation and the public authority” did not apply, since the Society was neither a public authority itself nor was it contracted to carry out its services on behalf of a public authority.
The Panel held as follows:
- “The Appellant has successfully shown that it is more than an Adoption Agency per se and that the whole purpose of what it is about is the manifestation of its religion and the religion of its members and supporters.
- “The Appellant’s objects clause is clear in that its activities have to be in accordance with the teachings of the Catholic Church, it is supported in the main by way of personnel who are clergy or laity of the Catholic Church.
- “The Appellant seeks however to be wider in its approach to society providing that the ethos of the Catholic Church is maintained by allowing non-Catholics to use its activities and to take part in its decision making process. The Appellant has non-Catholics in its adoption panel and employs a number of non-Catholic social workers on its staff.
- “This Appeal hinges on the application of Article 9 of The Convention. The Respondent took the view that it did not engage and reached the conclusion it did In issuing the decision appealed against.
- “The Panel takes the view that Article 9 engages in as far as The Appellant and the Child are concerned and in coming to that view the other parts of The Panel’s reasoning flow.
- “The Panel has decided that there is indirect discrimination but that that indirect discrimination is allowed in terms of The Equality Act because it is a proportionate means of achieving a legitimate aim.
- “The Panel found both the charities exception and the religious exception as contained in The Equality Act to apply and that the Appellant was not carrying on a service for which it was contracted to a public authority.
- “The Panel has considered the application of The Public Benefit Test which should be an objective test and considers that The Respondent erred in its application of the Public Benefit Test. The blanket application of a rule is not the correct approach but each time the Public Benefit Test is applied it should be specific to the facts before The Respondent.
- “The Panel has also considered The Respondent’s decision making process at review and has made recommendations to The Respondent that it reconsiders its statutory guidelines in that regard.
- “The Panel considered that in following The Direction The Appellant would have had a serious difficulty with their members and supporters in The Catholic Church which would ultimately result in its closure this would result in a loss to the community served by The Appellant and when compared with the discrimination complained of The Decision is a disproportionate regulatory measure.
- “The Panel is of the view that in considering The Respondent’s functions in terms of s 1 of the [Charities and Trustee Investment (Scotland)] Act that subsection 8 applies to how The Respondent of itself carries out its functions”.
(And as noted above, though the point was not reiterated in the final summary decision, the Panel also concluded that OSCR’s review of its original decision had been procedurally unfair.)
The first and most obvious point is that it would be quite astonishing if this decision were not appealed. The second is whether or not the Panel was correct to find that the discrimination complained of was indirect (and therefore capable of justification) rather than direct.
As to the second point, it is undoubtedly the case that St Margaret’s is not a public authority and that it does not operate under a contract with a public authority. The most interesting question, however, is how the case is to be distinguished from the Catholic Care litigation in England and Wales.
Catholic Care attempted to circumvent the provisions of the Equality Act (Sexual Orientation) Regulations 2007 altogether by asking the Charity Commission if it could change its charitable objects to state that it
“… shall only provide adoption services to heterosexuals and such services to heterosexuals will only be provided in accordance with the tenets of the Church”.
“… the drafting of this [objects] clause was always fundamentally flawed and the application was foredoomed to failure because it was directly, explicitly and obviously discriminatory and it only dealt with adoption services. In my view the Charity should have applied to amend its constitution to read something like the following: ‘The Charity shall provide its services in accordance with the tenets of the Church. For the avoidance of doubt the Roman Catholic Bishop of Leeds from time to time shall be the arbiter of whether such services and the manner of their provision fall within the tenets of the Church.’.”
In effect, that is the position of St Margaret’s:
“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 …” [my italics].
But whether or not that wording will survive further scrutiny by the Court of Session remains to be seen.