England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		17/03/2010

Mr Justice Briggs :

INTRODUCTION

1. This is an appeal on a point of law against two decisions of the Charity Tribunal ("the Tribunal") (Ms Alison McKenna, Mr Jonathan Holbrook and Mr Peter Hinchliffe) dated respectively the 13^th March and 1^st June 2009, by way of preliminary and final rulings upon an appeal against an earlier decision of the Charity Commission ("the Commission"), dated 18^th November 2008, by which it refused permission to the Appellant Catholic Care (Diocese of Leeds) to amend the objects clause in its Memorandum of Association under section 64 of the Charities Act 1993.
2. Catholic Care is a charitable company limited by guarantee which, among other charitable activities, provided the services of an adoption agency within and around the geographical area of the Roman Catholic Diocese of Leeds, funded partly by payments from local authorities and partly from charitable giving raised through the Roman Catholic Church. The essence of its adoption agency work consisted of the recruitment, assessment for suitability, training and support of prospective adoptive parents, including the provision of continuing support to parents after adoption.
3. In so doing, Catholic Care achieved particular success in providing adoptive parents for what are commonly known as "hard to place" children; that is, children for whom, for reasons of disability or other special needs, age, ethnic origin or other reasons it is in general harder than usual to find willing adoptive parents. The continuing support provided by Catholic Care to parents after adoption, funded from charitable giving from within the Catholic Church, has contributed to a lower failure rate than is commonly encountered in relation to adoptions arranged purely through the services of local authorities.
4. In common with many other Catholic adoption agencies, Catholic Care carried out its adoption agency activities, like all its activities, in accordance with the tenets of the Roman Catholic Church. An important tenet within that Church is a belief in the sanctity of marriage, together with a belief that the model for family life is provided by the Holy Family of Nazareth, as is reflected in clause 3(b)(ii) of its Memorandum of Association. As a consequence of that belief, it is the view of the trustees of Catholic Care, of which the chairman is the Roman Catholic Bishop of Leeds, that it is outside the tenets of the Roman Catholic Church to provide adoption services to same-sex cohabiting couples or civil partners. In fact, Catholic Care provided adoption services to couples only if they were married.
5. Section 81 of the Equality Act 2006 empowered the Secretary of State for Communities and Local Government by regulations to make provision about discrimination or harassment on grounds of sexual orientation. After substantial public consultation and Parliamentary debate, the Secretary of State made, and Parliament duly approved, the Equality Act (Sexual Orientation) Regulations 2007 ("the Regulations"). A main effect of the Regulations was, subject to important exceptions, to make it unlawful for a person to discriminate on grounds of sexual orientation in the provision of goods, facilities or services to the public or a section of the public. It is, and has always been, common ground in this litigation that for Catholic Care to refuse to provide its adoption agency service to same-sex couples or civil partners would contravene the Regulations, unless a relevant exception to that prohibition applied.
6. The Government's proposal to make what became the Regulations caused understandable consternation, not merely within the Roman Catholic Church, but also among those who regarded what I shall loosely call faith-based voluntary adoption agencies, including but not limited to Roman Catholic agencies, as providing an important public benefit by the pursuit of their charitable activities. The response of the Catholic Church itself is encapsulated in the last two paragraphs of an open letter to the Prime Minister and members of the Cabinet published on 22^nd January 2007 from the then head of the Roman Catholic Church in England, Cardinal Cormac Murphy-O'Connor:

"Our agencies have an excellent track record, which is well documented by the Commission for Social Care in their Regulatory Inspection Programme. It would be an unnecessary tragedy if legislation forced the closure of these adoption services, thereby significantly reducing the potential resources of adoptive families for the approximately 4,000 children currently waiting for adoption placements.

This outcome is wholly avoidable. We urge you to ensure that the regulations shortly to be laid before Parliament enable our agencies to continue their work with local authorities for the common good. There is nothing to lose, and children waiting for an adoptive family have much to gain, by our continuing successful collaboration."

The gist of the Cardinal Archbishop's request was that Roman Catholic adoption agencies should be able to continue to decline to provide their services to same-sex couples, by means of an exception to that effect in the proposed Regulations.

7. The Government did not accede to that request. Its response is encapsulated in the following extract from a statement by the then Prime Minister Mr Tony Blair published on the website of his Downing Street office (no10.gov.uk):

"I start from a very firm foundation: there is no place in our society for discrimination. That is why I support the right of gay couples to apply to adopt like any other couple. And that is why there can be no exemptions for faith-based adoption agencies offering publicly-funded services from regulations which prevent discrimination.

This will be made clear in the regulations that the Government will lay before Parliament shortly. In the interests of children, they will include a transition period before these Regulations come fully into force at the end of 2008 for existing adoption agencies. This will be coupled, during this period, with a statutory duty for any adoption agency which does not process applications from same-sex couples to refer them to another agency. I have also asked for a regular independent assessment from adoption and child welfare experts on the impact of the sexual orientation regulations on adoption in order to maintain the existing body of expertise.

I am convinced that this is a package which has the interests of children, and particularly the most vulnerable, at its heart. It recognises the hugely valuable role played in adoption by charities and volunteers, including those inspired by religious faith, ensure that we do not lose their expertise and services while upholding and extending the Government's record against discrimination in all spheres."

That response was reiterated in subsequent ministerial statements, by ministers in Parliamentary debate and in the Explanatory Memorandum to the Regulations. The transitional period referred to in the Prime Ministerial statement appears in Regulation 15 which, in relation to faith-based adoption agencies, postponed the prohibitive effect of the Regulations from the coming into force of the Regulations generally on 30^th April 2007, until the end of 2008.

8. The Prime Minister's expectation that the transitional period would ensure that the expertise and services of faith-based adoption agencies would not be lost to the public was only partly fulfilled. Some agencies, for example those under the auspices of the Anglican Church, found a way of accommodating the prohibition on sexual orientation discrimination within their continued activities, without breaking their ties with that Church. Some agencies, including a number formerly operating under the auspices of the Roman Catholic Church, severed their ties with that Church so as to be able to provide adoption services for same sex couples. Some faith-based charities found it possible to hive-off their adoption agency work while retaining their Church ties. For reasons to which I shall have to return in a little detail, Catholic Care, in common with a number of Roman Catholic adoption agencies, found it impossible or at least impracticable to pursue any of those alternatives. A number of such agencies were therefore forced to close, either during or at the end of the transitional period.
9. Catholic Care, and a small number of Catholic adoption agencies including Father Hudson's Society identified what they perceived to be an alternative to closure, namely by seeking to take advantage of an exception in favour of charities generally, to be found in Regulation 18, in the following terms:

"18.((1) Nothing in these Regulations shall make it unlawful for a person to provide benefits only to persons of a particular sexual orientation, if...

(a) he acts in pursuance of a charitable instrument, and

(b) the restriction of benefits to persons of that sexual orientation is imposed by reason of or on the grounds of the provisions of the charitable instrument.

(2) Nothing in these Regulations shall make it unlawful for the Charity Commission for England and Wales or the holder of the office of the Scottish Charity Regulator to exercise a function in relation to a charity in a manner which appears to the Commission or to the holder to be expedient in the interests of the charity, having regard to the provisions of the charitable instrument.

(3) In this regulation...

"charitable instrument" –

(a) means an instrument establishing or governing a charity, and

(b) includes a charitable instrument made before these Regulations come into force; and

"charity"...

(a) in relation to England and Wales, has the meaning given by the Charities Act 2006(a),

(b) in relation to Scotland, means a body entered in the Scottish Charity Register (b)."

10. The charitable instrument pursuant to which Catholic Care conducted its adoption agency was its Memorandum of Association. Its then (and indeed current) form was not considered to contain provisions expressly requiring the restriction of benefits to persons of a particular sexual orientation. Accordingly, Catholic Care (and those other charities) formulated amendments to their charitable instruments which did contain such provisions. The amendments formulated by Catholic Care consisted of a revised objects clause which included the following provisions:

"3.1 Subject to the restriction in Paragraph 3.2 below, the Charity Objects (the Objects) are:

3.1.1 The advancement of the Christian religion in accordance with the tenets of the Roman Catholic Church (the Church);

3.1.6 The advancement and promotion of the support, relief and care of:

3.1.6.1 Children and young people without families to care for them, including, but not limited to, adoption and fostering services;

3.2 The Charity shall only provide adoption services to heterosexuals and such services to heterosexuals will only be provided 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.

3.3 For the avoidance of doubt the restriction at Paragraph 3.2 above shall apply only to adoption services and shall not apply to any other services that the Charity may provide."

I shall refer to the objects thus identified as "the Proposed Objects".

11. By reason of section 64 of the Charities Act 1993, an alteration in the statement of a charitable company's objects requires the prior written consent of the Charity Commission. Accordingly Catholic Care applied to the Commission for consent to introduce the Proposed Objects by amendment. The Commission's refusal of that consent caused the litigation which has led to this appeal.
12. The Commission refused Catholic Care's request because it reasoned that the adoption of the Proposed Objects would not bring Catholic Care within Regulation 18, so that the giving of permission would serve no useful purpose. This conclusion followed from an interpretation of the word "benefits" in Regulation 18(1) as meaning only "benefits of a charitable nature provided to the charity's beneficiaries". It did not include incidental benefits afforded to persons other than the charity's intended beneficiaries. Since the intended beneficiaries of Catholic Care's adoption service, pursuant both to its existing objects and Proposed Objects, were children in need of adoption rather than prospective adoptive parents, nothing in Regulation 18(1) would permit Catholic Care to refuse provision of benefits in the form of its adoption services to same sex prospective parents: see paragraphs 26 to 31 of the Commission's written Final Decision dated 18^th November 2008. At paragraph 32, the Commission recorded that, in the circumstances, it did not consider that it needed to deal with the Human Rights issues which would have arisen if the Proposed Objects were lawful.
13. Both Catholic Care and Father Hudson's Society (which had a similar application refused) appealed to the Charity Tribunal. Pursuant to directions given on 16^th December 2008, the Tribunal proceeded first to hear two preliminary issues in February 2009. By then, the transitional period provided by Regulation 15 had expired. As a result Catholic Care was obliged to confine its adoption agency activities to the provision of support for adoptive parents already identified as suitable. It has continued to confine its adoption agency activities in that way ever since, in the hope that the outcome of this litigation may enable it to resume a full service in accordance with its Proposed Objects, without contravening the Regulations.
14. The issues directed to be decided as preliminary issues at the February 2009 hearing were:

i) Whether the term "to provide benefits" in regulation 18(1) of the 2007 Regulations means to provide benefits which it is a purpose of the charity to provide.

ii) Whether on the true construction of the Proposed Objects it would be a purpose of the charities to provide benefits to potential adopters.

At the beginning of the hearing, on 12^th February 2009 those two issues were, by consent, subsumed into the following revised single issue namely:

"If the charities adopted the proposed objects, would it be lawful for them to decline to provide adoption services to a person on the grounds of sexual orientation?"

15. After hearing submissions from the parties, and on behalf of the Attorney General, the Tribunal decided to accede to a request to intervene by the Equality and Human Rights Commission ("the EHRC"). The outcome of the preliminary hearing appeared in a written ruling dated 13^th March 2009 ("the Preliminary Ruling").
16. The Tribunal's reasoning in its Preliminary Ruling does not lend itself to concise summary, nor is it entirely easy to understand. Doing my best, I hope without distortion, it runs as follows. First, the Tribunal rejected the Charity Commission's interpretation of "benefits" in Regulation 18(1), concluding (at paragraph 53) that:

" … if the governing document of the charity permits it to provide benefits to one class of persons as a means of achieving an ultimate charitable purpose … then such activity would constitute "acting in pursuance of a charitable instrument", as referred to in regulation 18(1)(a) of the Regulations."

17. Secondly, it concluded that Regulation 18 did contemplate circumstances in which the pursuit of charitable activity for the public benefit might, consistently with the jurisprudence of the European Court of Human Rights, justify interference with the enjoyment of Convention rights, and specifically the right not to be discriminated against on grounds of sexual orientation: see paragraph 64:

"It seems to the Tribunal that Parliament intended to safeguard the valuable contribution of charities in enacting Regulating 18, by providing for circumstances in which legitimate charitable activity could tip the balance in favour of a justified interference with the enjoyment of Convention rights. The Tribunal considers that the European Court of Human Rights would also be likely to view the operation of our distinctive system of charity law as capable of providing "an objective and reasonable justification" for permitting different treatment of people or for failing to permit different treatment of people whose situations are significantly different, in view of the overriding need for a public benefit to arise from charitable endeavour and the measures taken by the State to encourage and support the charitable sector."

18. Thirdly, the Tribunal concluded that Regulation 18 contemplated only what it described as "a discrete area of pure charitable activity" entirely outside and distinct from the specific areas of activity dealt with in other Regulations. It therefore concluded (at paragraph 57) that Regulation 18 described only:

"Such pure charitable activity as is (a) only undertaken by charities, (b) is permitted by the charity's own charitable instrument and (c) is not prohibited by the other Regulations."

Paragraph 57 repays careful reading in full, because it contains what I conceive to be the heart of the Tribunal's analysis.

19. Next, the Tribunal concluded that Regulation 18(2) was intended by Parliament specifically to confer upon the Charity Commission the responsibility for determining the question whether, within a narrow field of "pure charitable activity" contemplated by Regulation 18, the public benefit constituted by a particular form of that activity would justify some reasonable and proportionate inroad into the right against discrimination on grounds of sexual orientation, rejecting for that purpose the submission of the ECHR to the contrary: see paragraph 69.
20. Next, the Tribunal concluded that the Proposed Objects would not, under Regulation 18, permit Catholic Care lawfully to continue providing its adoption service as it had until December 2008, because that was an activity governed by Regulation 15, mutually exclusive from any pure charitable activity within the contemplation of Regulation 18, and the transitional permission for continued activity of the type contemplated by Regulation 15 had expired: see paragraph 74.
21. Finally, the Tribunal expressed itself unable to determine the preliminary issue, because of the possibility that Catholic Care might, having adopted the Proposed Objects, carry out a quite different form of adoption related activity, for example of a type permitted by Regulation 14, which permits certain forms of activity by faith-based organisations or persons operating under their auspices, provided that was not to be carried out on behalf of a public authority pursuant to contract, something which the Tribunal described as "purely pastoral activity of a non-public character": see paragraph 77 (iv) and (v).
22. Accordingly the Tribunal adjourned the final determination of the preliminary issue to a further hearing which took place in May 2009. By that time, Father Hudson's Society had abandoned its appeal, and Catholic Care had established that there was no limited form of adoption related activity which would, at one and the same time, fall within the Tribunal's interpretation of pure charitable activity under Regulation 18, while at the same time being sufficient to enable continued authorisation as an adoption agency by OFSTED.
23. Accordingly, by a Final Ruling dated 1^st June 2009 the Tribunal determined the preliminary issue in the negative, concluded therefore that no useful purpose would be served by permitting the adoption of the Proposed Objects and dismissed the appeal.
24. It is to be noted that a consequence of the approaches adopted both by the Commission and by the Tribunal was that, albeit for very different reasons, neither of them considered it necessary to embark upon the discrete task of considering whether the proposed differential treatment on grounds of sexual orientation contemplated by Catholic Care could be justified (in Convention terms) in the light of the public benefit thereby to be achieved. Nonetheless the Tribunal acknowledged (at paragraph 69 of the Preliminary Ruling) that, in a case falling within Regulation 18, that would be the responsibility of the Charity Commission under Regulation 18(2). In paragraph 22 of its Final Ruling, the Tribunal expressed, obiter, a view that, if such an exercise had been required, on the evidence then available, Catholic Care would probably have failed to demonstrate a sufficient public benefit.

THE APPEAL TO THE HIGH COURT

25. In outline, Catholic Care's appeal asserts both that the Commission was wrong in its restricted interpretation of "benefits" and that the Tribunal was wrong in law in its analysis of the relationship between Regulations 18, 14 and 15, and therefore wrong to conclude that Regulation 18 could only apply to an activity of a purely private kind not prohibited or dealt with specifically by some other Regulation. Nonetheless Mr McCall QC for Catholic Care readily acknowledged that the question whether his client should be permitted to adopt its Proposed Objects so as to require it to apply differential treatment in the provision of adoption services necessarily involved a decision by the Commission whether it was justified by the consequential benefit thereby to be achieved, to be addressed by reference to Human Rights Convention jurisprudence.
26. For the Commission Mr Pearce QC adhered solidly to the Commission's original reasoning for rejecting Catholic Care's application, based upon its interpretation of the word "benefits" in Regulation 18(1). By Respondent's Notice the Commission maintained that the Tribunal had been wrong to reject that analysis. The Commission did not support the Tribunal's own analysis, even in the alternative.
27. The EHRC by Miss Mountfield was broadly neutral on the issues of construction of Regulation 18. She submitted, by copious reference to what she described as human rights and equality law, first that no entity with the Proposed Objects could be charitable, since discrimination of the type contemplated could not be for the public benefit and secondly, that even if it could, it would be unlawful for the Commission as a public body to permit Catholic Care to make the proposed amendments, motivated as they were by a desire to discriminate, contrary to Articles 8 and 14 of the Convention, in combination.
28. I have already described this appeal as being on a point of law: see section 2C of the Charities Act 1993. Pursuant to CPR Part 52, the High Court may, if it does not decide to dismiss the appeal, make any order which the Tribunal could have made, pursuant to its powers. Those are set out in Schedule 1C to the Charities Act 1993. In relation to an appeal against a decision of the Commission to withhold consent under section 64 of the Act, the Tribunal has power to quash the decision and (if appropriate) remit the matter to the Commission, either generally or for determination in accordance with a finding made or direction given by the Tribunal: see Schedule 1C paragraph 5 and its appendant table.
29. The first issue arising on this appeal is therefore whether the Tribunal's conclusion on the preliminary issue that it would not be lawful for Catholic Care to decline to provide adoption services to a person on the grounds of sexual orientation if it adopted the Proposed Objects was vitiated by an error of law. It would only be so vitiated if both (a) its interpretation of Regulation 18 was wrong and (b) the Commission's interpretation of Regulation 18 was also wrong.
30. Nonetheless, the Tribunal's conclusion on that preliminary issue might be saved if Miss Mountfield's submission on behalf of the EHRC, namely that adoption of the Proposed Objects would deprive Catholic Care of its charitable status, were correct. In that event, Catholic Care would cease to be a charity and therefore fall wholly outside the protection of Regulation 18. Needless to say, Catholic Care would not want, nor would the Commission permit it, to adopt the Proposed Objects if that were to be the consequence of doing so.
31. If Catholic Care surmounts all those hurdles, and thereby demonstrates that it would pursuant to the Proposed Objects be lawful for it to decline to provide its adoption services on grounds of sexual orientation, the question would then arise, whether the Commission ought to permit the adoption of the Proposed Objects, pursuant to its power to do so under section 64 of the Charities Act 1993, read together with Regulation 18(2). That is not a question which either the Commission or the Tribunal have yet addressed. Mr Pearce submitted that if Catholic Care's appeal prospered thus far, I should simply remit that question to the Commission. Each of Mr McCall and Miss Mountfield submitted that I should, if I accepted either of their opposed submissions on that question in full, such that it appeared to me that there was only one decision which the Commission could rationally make on that question, direct the Commission to decide accordingly.

Issue 1 – The Interpretation of Regulation 18

32. Like any other statutory provision, Regulation 18 must be construed in its proper context. That includes its context as part of the Regulations, taken as a whole, and the context constituted by admissible evidence as to the legislative history of the Regulations limited, in relation to Parliamentary debate, by Pepper (Inspector of Taxes) v. Hart [1993] AC 593. Most important for present purposes is the context of the Human Rights Convention.
33. The Convention and its associated jurisprudence is not merely a relevant aspect of the context of the Regulations. They must, like any legislation, be interpreted as far as possible in a way which is compatible with Convention rights: see section 3 of the Human Rights Act 1998. Furthermore, as is common ground, the Regulations were enacted specifically for the purpose of giving additional effect to the United Kingdom's Convention obligations. There has not in this appeal been any suggestion that the Regulations are, in any respect, incompatible with a Convention right.
34. Finally, legislation is to be construed purposively. The meaning of its language is no more a matter of grammars and dictionaries than the meaning of a contract. Individual words and phrases may take a particular meaning from the context in which they are used. Exceptions are to be narrowly construed, but even they must be recognised as being there for a purpose. That purpose must be ascertained, however elusive it may be.

THE REGULATIONS

35. In terms of their broad structure, the Regulations begin by expressing a general prohibition of discrimination on grounds of sexual orientation (as defined in Regulation 3) in two main fields, firstly the provision of goods, facilities and services (in Regulation 4) and secondly in the exercise of any function of a public nature by a public authority (in Regulation 8). There follow numerous exceptions to that general prohibition. Some of them simply disapply Regulation 8 to certain bodies (such as Parliament and the Security Service: see Part 1 of Schedule 1) or in relation to the exercise of particular public functions (such as judicial functions: see Schedule 1 Part 2 paragraph 1). Others disapply the Regulations to particular forms of conduct, regardless of the identity of the person in question, such as the meeting of special needs for education, training or welfare: see Regulation 13. A third class of exception depends both upon the identity of the person in question and the type of conduct to which the Regulations are disapplied. Examples of that class include Regulations 14, 15, 17 and 18, to which I shall return in some detail.
36. It is unnecessary to describe the detailed definition of discrimination on grounds of sexual orientation in Regulation 3, because it is common ground that the adoption service which Catholic Care wishes to carry on under the proposed objects would constitute such discrimination, because of its refusal to provide same-sex couples with that service. It is however to be noted that the combined effect of Regulations 4 and 8 is that whereas non-exempt public authorities are prohibited (subject to a relevant exception) from any form of sexual orientation discrimination, other persons are only prohibited from such discrimination in relation to particular activities, primarily the provision of goods, facilities and services. Regulations 7, 9 and 10 prohibit certain other forms of discrimination which are of no present materiality.
37. Most of the debate about the relevance of the Regulations as a whole to the interpretation of Regulation 18 centred around the particular provisions of the exceptions in Regulations 13, 14 and 15. I shall therefore set them out, without at this stage seeking to resolve any particular issues about their interpretation.
38. Regulation 13 is, as I have said, concerned with the provision of education, training or welfare to meet the special needs of persons on the grounds of their sexual orientation. Its text is as follows:

"Education, training and welfare

13. Nothing in these regulations shall make it unlawful for any person to do anything by way of...

(a) meeting special needs for education, training or welfare of persons on grounds of their sexual orientation, or

(b) providing ancillary benefits in connection with meeting the needs mentioned in paragraph (a)."

39. Regulation 14 is, as its heading demonstrates, concerned to avoid the general prohibitions in the Regulations from infringing religious rights guaranteed by Article 9 of the Convention, and permits (by an exclusion from the general prohibition) sexual orientation discrimination in relation to specified activities of what may loosely be described as religious organisations, or persons acting under their auspices. For present purposes, the following parts of Regulation 14 are sufficient:

"Organisations relating to religion or belief

14.((1) Subject to paragraphs (2) and (8) this regulation applies to an organisation the purpose of which is...

(a) to practise a religion or belief,

(b) to advance a religion or belief,

(c) to teach the practice or principles of a religion or belief,

(d) to enable persons of a religion or belief to receive any benefit, or to engage in any activity, within the framework of that religion or belief.

(2) This regulation does not apply ...

(a) to an organisation whose sole or main purpose is commercial,

(b) in relation to regulation 7 (Educational establishments, local educational authorities, and education authorities).

(3) Nothing in these Regulations shall make it unlawful for an organisation to which this regulation applies, or for anyone acting on behalf of or under the auspices of an organisation to which this regulation applies...

(a) to restrict membership of the organisation,

(b) to restrict participation in activities undertaken by the organisation or on its behalf or under its auspices,

(c) to restrict the provision of goods, facilities or services in the course of activities undertaken by the organisation or on its behalf or under its auspices, or

(d) to restrict the use or disposal of premises owned or controlled by the organisation,

in respect of a person on the ground of his sexual orientation.

(4) Nothing in these Regulations shall make it unlawful for a minister...

(a) to restrict participation in activities carried on in the performance of his functions in connection with or in respect of an organisation to which this regulation relates, or

(b) to restrict the provision of goods, facilities or services in the course of activities carried on in the performance of his functions in connection with or in respect of an organisation to which this regulation relates,

in respect of a person on the ground of his sexual orientation.

(5) Paragraphs (3) and (4) permit a restriction only if imposed...

(a) if it is necessary to comply with the doctrine of the organisation; or

(b) so as to avoid conflicting with the strongly held religious convictions of a significant number of the religion's followers.

…

(8) This regulation does not apply where an organisation of the kind referred to in paragraph (1) or any person acting on its behalf or under its auspices...

(a) makes provision of a kind referred to in regulation 4, or

(b) exercises a function of a kind referred to in regulation 8,

on behalf of a public authority under the terms of a contract for provision of that kind between that authority and an organisation referred to in paragraph (1) or, if different, the person making that provision."

40. Regulation 15 was, as I have described, designed to provide a transitional period within which faith-based publicly funded adoption agencies could, if possible, adapt themselves to the new regime. Its text is as follows:

"Adoption and fostering agencies

15.((1) Paragraph (2) applies to a voluntary adoption agency or fostering agency that...

(a) is an organisation of the kind referred to in regulation 14(1), or

(b) acts on behalf of or under the auspices of such an organisation.

(2) Subject to paragraph (3), during the period from the commencement of these Regulations until 31^st December 2008, nothing in these Regulations shall make it unlawful for such a voluntary adoption agency or fostering agency to restrict the provision of its services or facilities to a person on the grounds of his sexual orientation.

(3) If such a voluntary adoption agency or fostering agency restricts the provision of those services or facilities as mentioned in paragraph (2), it must at the same time refer the person seeking them to another person who the agency believes provides similar services or facilities to persons of his sexual orientation.

(4) Paragraph (2) permits a restriction only if imposed...

(a) if it is necessary to comply with the doctrine of the organisation, or

(b) so as to avoid conflicting with the strongly held religious convictions of a significant number of the religion's followers."

41. It is to be noted that, although its heading appears to include adoption and fostering agencies generally, it applies only to agencies which either are religious organisations, or persons acting under their auspices, within the meaning of Regulation 14: see Regulation 15(1). Again, although this is not apparent from the heading, its specific purpose is to provide transitional protection to publicly funded agencies of that type, since agencies otherwise falling within Regulation 14 without acting on behalf of a public authority under the terms of a contract would enjoy permanent (although qualified) protection because they would not fall foul of Regulation 14(8).
42. I have already quoted in full the text of Regulation 18, at paragraph 9 above. Plainly, it is intended to provide a measure of protection from the prohibition against sexual orientation discrimination to charities generally, rather than to charitable adoption agencies in particular. It is therefore prima facie unlikely that the particular features of charitable adoption agencies will constitute a valuable guide to an understanding of the general meaning of Regulation 18.

THE LEGISLATIVE HISTORY

43. I was taken by Mr Pearce both to (and through) a wealth of material illustrative of the legislative history of the Regulations generally, and also to a much smaller but illuminating aspect of the pre-history of the type of charitable exemption used in the drafting of Regulation 18(1).
44. As to the former, I have already quoted the relevant part of the Prime Ministerial statement by which the Government firmly refused to afford to faith-based publicly funded adoption agencies any general permanent exemption from the prohibition on sexual orientation discrimination. That policy was reiterated, again by the Prime Minister in a statement on 24^th May 2007, by the Secretary of State for Communities and Local Government (Ruth Kelly) in a written ministerial statement on 7^th March 2007, in paragraph 7.13 of the Explanatory Memorandum to the Regulations, by ministerial spokespersons in committee debate both in the Commons (on 15^th March 2007) and in the Lords (on 21^st March 2007), and in the Government's response to consultation entitled "Getting Equal: Proposals to outlaw sexual orientation discrimination in the provision of goods and services" published in March 2007. Save for the added weight that comes from repetition over time, those statements add nothing to the clarity of the Prime Ministerial statement which I have already quoted.
45. I was, by contrast, shown much less material of that kind addressed to the meaning and intent of the charities exception in Regulation 18. Since it was however directed specifically to the Regulation to be interpreted on this appeal, I shall describe it in some detail.
46. First, the "Getting Equal" consultation paper, issued on 13^th March 2006 contained the following:

"Charities

3.37 We propose to provide an exception to the goods, facilities and services prohibition in the sexual orientation regulations to allow charities that have been legitimately established to provide services, to specific groups with an identifiable need on the basis of their sexual orientation. This would allow such charities to operate in line with the provisions of the charitable instrument through which they were established. If a charity's objectives do not specify a beneficiary group on the basis of sexual orientation, then the charity should not be able to discriminate on the grounds of sexual orientation and the exception should not apply.

3.38 There are clear examples of specific needs arising for LGB beneficiaries and for which charities have been established and are on the Charity Commission's register. We believe it is right that these charities should be able to continue to focus on LGB beneficiaries where there is an identified need that affects those groups and the charity's objectives identify that group as the beneficiary class.

3.39 In particular, such charities often play an important role in tackling the historic disadvantage of groups who have experienced discrimination, or in tackling problems faced by a specific group. For example, charities that promote LGB rights or provide counselling services for LGB victims of domestic abuse would be covered by such an exception."

47. The policy enunciated in those paragraphs was repeated in the Government's response to that consultation at section 4 on page 13 under the general heading 'Individual Questions'.
48. Paragraph 7.11 of the Explanatory Memorandum to the Regulations provided as follows:

"7.11 Charities will be covered by the Regulations. The only exceptions are:

( where a charity provides services, for example, counselling, to a specific group on the basis of their sexual orientation, in accordance with their charitable instruments; or

( where it is a religious charity and certain conditions are satisfied. (See the Religious Organisation Exemption)"

49. The Explanatory Note contained the following relevant paragraph:

"Charities are also exempt from the Regulations as provided in Regulation 18 insofar as they are established to confer a benefit on a particular group by virtue of sexual orientation, and act in accordance with this charitable instrument."

By contrast, no specific reference to the charity exeption appears in the extracts from the Parliamentary debates to which I have referred.

50. The language used for the charity exception in Regulation 18(1) has its own legislative antecedents. Section 43 of the Sex Discrimination Act 1975 headed Charities provided as follows:

"(1) Nothing in Parts II to IV shall

(a) be construed as affecting a provision to which this subsection applies, or

(b) render unlawful an act which is done in order to give effect to such a provision.

(2) Subsection (1) applies to a provision for conferring benefits on persons of one sex only (disregarding any benefits to persons of the opposite sex which are exceptional or are relatively insignificant), being a provision which is contained in a charitable instrument.

(3) …."

51. With effect from 6^th April 2008, section 43 was amended by the addition of a new subsection in the following terms:

"(2A) But subsection (1) does not apply to discrimination under section 1 or 2A in its application to sections 29 to 31 unless the conferral of benefits is...

(a) a proportionate means of achieving a legitimate aim or

(b) for the purpose of preventing or compensating for a disadvantage linked to sex."

I infer (with the assent of both Mr McCall and Miss Mountfield) that at least subsection (2A)(a) was introduced so as to bring the express terms of section 43 into compatibility with Convention rights, and with Article 14 in particular. Even before this amendment came into force, it would in my judgment have been necessary to construe section 43 as containing that limitation by implication, pursuant to section 3 of the Human Rights Act 1998, because of its undoubted effect upon the interpretation of antecedent legislation.

52. It is also to be noted that section 43 (2A) necessarily contemplates that sex discrimination in the conferring of benefits by a charity may be a proportionate means of achieving a legitimate aim even if for a purpose which does not consist of meeting the special needs of the protected class. That conclusion is necessitated by the use of the word "or" at the end of section (2A)(a). There may of course be a large overlap in practice between sub-sections (2A)(a) and (b).
53. It appears that the Government intends to replace Regulation 18, and similar charitable exceptions from the prohibition of other forms of discrimination, by a general charitable exception in the Equality Bill currently passing through Parliament. Clause 192 contains in substance, although not in precise language, a form of exception very similar to that to be found in section 43 of the Sex Discrimination Act 1975, as amended. In particular, it includes in subsection (2) a provision substantially identical to section 43 (2A), subject only to replacing sex with a broader reference to any protected characteristic. For that purpose, protected characteristics include sexual orientation.
54. The general charitable exception in clause 192 of the Equality Bill will, if passed in that form, also replace specific charitable exceptions from racial discrimination, currently in section 34 of the Race Relations Act 1976 and disability discrimination, currently in section 18C of the Disability Discrimination Act 1995. Those provisions are broadly equivalent to section 43 of the Sex Discrimination Act in its un-amended form. For reasons which I have been unable to ascertain, they have not yet been amended so as to make them expressly Convention right compatible, but clause 192 of the Equality Bill will, if passed, have that effect. Nonetheless, with effect from the coming into force of the Human Rights Act 1998, it seems to me that each of those charity exceptions would have needed to have been construed in conformity with Convention rights, in the same way as would have been applicable to section 43 of the Sex Discrimination Act prior to its amendment.

THE HUMAN RIGHTS CONVENTION

55. Discrimination is the subject matter of Article 14 of the Convention. It operates not by way of the conferral of a freestanding right not to be discriminated against, but rather by way of complementing the other substantive provisions of the Convention and the Protocols. It has no independent existence, since it has effect solely in relation to the enjoyment of the rights and freedoms safeguarded by those other provisions: see Schmidt v. Germany (1994) 18 EHRR 513, 526 at paragraph 22 of the Judgment of the ECHR.
56. Nor does Article 14 confer an absolute right. A difference of treatment is discriminatory if it has no objective and reasonable justification, that is if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised: see paragraph 24 of the same Judgment. Schmidt v. Germany was a case about sex discrimination.
57. Although not specifically referred to, sexual orientation discrimination is plainly within the ambit of Article 14: see for example Salgueiro Da Silva Mouta v. Portugal (2001) 31 EHRR 47. Furthermore, it is common ground that it is one of those forms of discrimination (called by equality lawyers a "suspect class") in relation to which a difference in treatment will be justified, so as not to infringe Article 14, only if particularly convincing and weighty reasons are shown. In relation to matters concerning adoption, Article 14 is engaged via Article 8, which provides that:

"Everyone has a right to respect for his private and family life, his home and his correspondence."

58. The application of the "convincing and weighty reasons" test for the justification of differential treatment by reference to sexual orientation is best illustrated by EB v. France (2008) 47 EHRR 21 where, at paragraph 91 the ECHR said this, (omitting the copious references to authority, including the Da Silva case):

"The Court reiterates that, for the purposes of Article 14, a difference in treatment is discriminatory if it has no objective and reasonable justification, which means that it does not pursue a "legitimate aim" or that there is no "reasonable proportionality between the means employed and the aim sought to be realised". Where sexual orientation is in issue, there is a need for particularly convincing and weighty reasons to justify a difference in treatment regarding rights falling within Article 8."

59. Very recently, the ECHR has stated that in relation to the justification of differential treatment on grounds of sexual orientation, the State's margin of appreciation is narrow, and that the principle of proportionality requires that the measure chosen to realise the legitimate aim must be both suitable in general, and necessary in the circumstances: see Kozak v Poland [2010] ECHR 280, at paragraph 92.
60. Article 9 of the Convention provides a measure of protection in relation to religious belief. In outline, it affords a more or less absolute right to hold a religious belief, but only a heavily qualified right to manifest that belief by conduct. The more public and secular the sphere in which the conduct takes place, the less protection is afforded by Article 9. This is encapsulated in the following passage from the decision of the Commission in C v. the United Kingdom App Number 10358/83, 37 ECHR D&R 142, at 147:

"Article 9 primarily protects the sphere of personal beliefs and religious creeds, i.e. the area which is sometimes called the forum internum. In addition, it protects acts which are intimately linked to these attitudes, such as acts of worship or devotion which are aspects of the practice of a religion or belief in a generally recognised form.

However, in protecting this personal sphere Article 9 of the Convention does not always guarantee the right to behave in the public sphere in a way which is dictated by such a belief:- for instance by refusing to pay certain taxes because part of the revenue so raised may be applied to military expenditure. The Commission has so held in Application No. 7050/75 (Arrowsmith v. the United Kingdom, Comm. Report para 71 D.R. 19 p5.), where it stated that "the term 'practice' as employed in Article 9(1) does not cover each act which is motivated or influenced by a religion or a belief."

For a perceptive and critical analysis of the way in which this jurisprudence has struck an uneasy balance between respect for religious belief and the prohibition of discrimination on grounds of sexual orientation, see Carl Stychin: Faith in the Future: Sexuality, Religion and the Public Sphere (2009) 29 Oxford Journal of Legal Studies 729.

CHARITY LAW

61. The final aspect of the context in which Regulation 18 must be interpreted is that of charity law. This is necessitated by the fact that Regulation 18 is entirely, and only, concerned with providing an exemption to charities or, strictly, to persons acting in pursuance of a charitable instrument. That includes charitable persons (such as Catholic Care), and the trustees of a charitable trust.
62. There are four features of charity law which are relevant for present purposes. The first is that a charitable institution or instrument (such as a trust) is defined as such by reference not to its beneficiaries, but by reference to its purpose. Thus whereas an ordinary trust is valid only if it exists for the benefit of a defined class of beneficiaries, a charitable trust is, by definition, a purpose trust. This is clearly reflected in section 1 of the Charities Act 2006 which, under the heading "Meaning of charity", provides that:

"(1) For the purposes of the law of England and Wales, "charity" means an institution which...

Is established for charitable purposes only, and

b) ….."

Section 2(2) contains a list of qualifying purposes, none of which use language designed specifically to identify a discrete beneficial class.

63. It is of course common parlance to speak in terms of the beneficial class of a charity such as, for example, the poor inhabitants of a particular locality, but this masks the legal reality, which is that a trust to make provision of benefits to members of that class is in truth a trust for the charitable purpose of the relief of poverty.
64. The second relevant aspect is the requirement of exclusivity. An institution or instrument is not charitable unless its purposes are exclusively charitable: see again the use of the word "only" in section 1(1)(a) of the Charities Act 2006. There is nothing new in this. Testators have commonly failed to establish a charitable trust by the use of phrases such as "charitable or benevolent purposes". The relevance of this is that Regulation 18 will apply only to conduct in pursuance of an instrument the purposes of which are exclusively charitable. This is made explicit in the charitable exception in section 43(3) of the Sex Discrimination Act 1975, but it is implicit in Regulation 18, because subparagraph (3) defines "charitable instrument" as meaning an instrument establishing or governing a charity, and "charity" is defined by reference to the Charities Act 2006.
65. The third and most important feature of charity law is that a purpose is not charitable unless it is for the public benefit. Charitable trusts are public, not private, trusts: see Lewin on Trusts (18^th ed.) Para 1-35:

"…indeed public trusts and charitable trusts may be considered in general as synonymous expressions. "

66. While the requirement for public benefit has always been a pre-requisite of charitable status, this has recently been given statutory force: see sections 2(1)(b) and 3 of the Charities Act 2006. Section 3 is worth quoting in full:

"3 The "public benefit" test

(1) This section applies in connection with the requirement in section 2(1)(b) that a purpose falling within section 2(2) must be for the public benefit if it is to be a charitable purpose.

(2) In determining whether that requirement is satisfied in relation to any such purpose, it is not to be presumed that a purpose of a particular description is for the public benefit.

(3) In this Part any reference to the public benefit is a reference to the public benefit as that term is understood for the purposes of the law relating to charities in England and Wales.

(4) Subsection (3) applies subject to subsection (2)."

67. For present purposes, the important point which emerges from section 3 is that, although general charity law (which is by no means entirely statutory) is the primary source for the understanding of the meaning of public benefit, it is no longer to be presumed that any particular type of purpose is for the public benefit. Section 3 therefore expressly contemplates that purposes commonly regarded as charitable, such as the advancement of religion or education, the relief of sickness or poverty, or the care of children in need, may not be for the public benefit, for example if they are sought to be achieved in a particular manner. It therefore admits of the possibility that the question whether a particular purpose which is within section 2(2) is charitable may require a weighing of the public benefits and dis-benefits associated with its implementation.
68. That such a balancing exercise may be required is expressly contemplated by section E4 of the Charity Commission's general guidance paper headed "Charities and Public Benefit", issued pursuant to the Commission's obligation to issue guidance in section 4(1) of the Charities Act 2006. It contains the following passage:

"E4. Principle 1c: Benefits must be balanced against any detriment or harm

'Benefit' means the overall or net benefit to the public. It is not simply a question of showing that some benefit may result.

The achievement of a particular aim may be of some benefit to the public but, in achieving that benefit, may also have detrimental or harmful effects. In assessing the public benefit of individual organisations, we will consider any evidence of significant detrimental or harmful effects of that organisation carrying out its aims in its particular circumstances. There would need to be some real evidence of detriment or harm; it cannot just be supposed

The existence of detriment or harm does not necessarily mean that the organisation cannot be charitable. It is a question of balancing the benefits against the detriment or harm.

If the detrimental or harmful consequences are greater than the benefits, the overall result is that the organisation would not be charitable."

While the Commission's obligation to issue guidance is not itself determinative of the law, I can see nothing legally objectionable in the analysis in that passage. On the contrary (and in common with counsel on this appeal) I consider it to be correct.

69. The final aspect of charity law relevant for present purposes is the regulatory role of the Charity Commission itself. I have already mentioned its duty to give guidance as to its public benefit objective. Its role is expressly recognised by Regulation 18(2). It extends to determining (subject to appeal) whether a particular applicant for registration as a charity is a charity. In the present case its function includes both an analysis of whether the Proposed Objects, if implemented, would deprive Catholic Care of its charitable status and the more general question whether to permit the proposed amendment would be "expedient in the interests of the charity".
70. The Charity Commission is a public authority which is obliged not to act in a way which is incompatible with Convention rights. Furthermore, the Charities Act 2006, including in particular its definition of public benefit, must be interpreted, as far as possible, in a manner compatible with Convention rights. It follows that it is inherent within Regulation 18 that its practical application in terms of affording charities an exception from what might otherwise be prohibited elsewhere in the Regulations is subject to the control of a Convention compliant public authority.
71. That concludes my analysis of the relevant context in which Regulation 18 must be interpreted. I make no apology for its length. It not infrequently happens that apparently simple statutory provisions contain concealed complexities which are only revealed by a Convention right compatible analysis. Furthermore, complexity is inherent in the interpretation of provisions which straddle different areas of law such as, in the present case, charity law, equality law and Convention jurisprudence.

THE PURPOSE OF REGULATION 18

72. The purpose of the Regulations as a whole is unambiguous. It is to put in place a qualified prohibition of discrimination on grounds of sexual orientation, discrimination being defined by Regulation 3 by reference to the concept of less favourable treatment. It is a qualified prohibition because it implements a qualified Convention right, in the sense that some forms of differential treatment may nonetheless be justified under Article 14, if undertaken for a legitimate aim and in a manner where the means employed are proportionate to the aim sought to be realised. If that can be demonstrated by convincing and weighty reasons, such a difference in treatment will not be discrimination within the meaning of Article 14.
73. It is perhaps unfortunate that whereas, under Article 14, justified differential treatment is not defined as discrimination at all, the Regulations contain a broader definition of discrimination, and then provide exceptions which mean that discrimination, thus defined, is not prohibited. Nonetheless that different use of the word discrimination does not mask the reality that the exceptions in the Regulations are designed to serve as a means of permitting justified differential treatment, as contemplated by Article 14.
74. It follows in my judgment that the purpose behind all the relevant exceptions in the Regulations (by which I mean those to be found in Regulations 13, 14, 17 and 18) is to exclude from the general prohibition types of differential treatment on grounds of sexual orientation which would, in the view of Parliament (applying for that purpose an appropriate margin of appreciation) be justified in the sense which I have described, so as to fall short of discrimination contrary to Article 14.
75. Thus, meeting the special needs for education, training or welfare of persons on grounds of their sexual orientation, protected by Regulation 13, is an obvious example of justified differential treatment. In the same way, Regulation 14 seeks to give effect to the right for respect for religious belief in Article 9, by permitting a range of activities by religious organisations, or persons acting under their auspices, provided (a) that such differential treatment is necessary to comply with the doctrine of the organisation or to avoid conflict with strongly held religious convictions of a significant number of the number of religion's followers (subparagraph (5)), and (b) that the activity in question is not carried on behalf of a public authority pursuant to a contract. The restriction in subparagraph (5) is necessary since otherwise Article 9 would not be engaged by prohibition of the relevant differential treatment. The restriction in subparagraph (8) is necessitated because Article 9 is of limited, if any, application to the conduct of, or by an agent of, a public authority: see for example Ladele v. London Borough of Islington [2009] EWCA Civ 1357.
76. The transitional protection for faith-based publicly funded adoption agencies was conferred by Regulation 15 for what I infer from the public debate was a more pragmatic purpose. Nonetheless I can well understand why both the Government and Parliament should have considered that the giving of time to faith based organisations performing a valuable public function in which to reorganise or cease their activities without undue disruption to the interests of needy children may well have been thought to be justified within the terms of Article 14, albeit only on a temporary basis.
77. Regulation 17 (to which I have not thus far referred) affords a limited exception from the prohibition on discrimination by associations (usually private clubs), where the main object of the association is to enable the benefits of membership to be enjoyed by persons of a particular sexual orientation. It protects, for example, gay clubs, and the Article 14 justification for that exception is obvious.
78. In my judgment the purpose of Regulation 18 is to afford to charities an exception from the prohibition of differential treatment on grounds of sexual orientation, wherever the public purpose being (or to be) achieved by the charity in question constitutes an Article 14 justification for that differential treatment.
79. I readily accept Mr Pearce's submission based upon the Government's "Getting Equal" consultation paper, that a particular reason why the Government wished to include a charity exception within the Regulations was to enable charities already in existence for the provision of services to specific groups with an identifiable need on the basis of their sexual orientation to continue to satisfy those needs. Thus for example it would protect the continued activity of a charity established for the purpose of providing counselling to gay teenagers, because of their specific vulnerability to bullying or ridicule, in particular at school.
80. Nonetheless I do not accept that the boundaries of the purpose behind Regulation 18 can be so precisely or narrowly confined, in particular in the absence of anything in its language to justify such a restriction. I have three main reasons for this. The first is that it would be irrational to limit the purpose to the preservation of existing charities, and exclude new ones set up for the same purpose.
81. Secondly, if the purpose behind Regulation 18 is limited to meeting the special needs of persons on grounds of their own sexual orientation, it adds nothing of substance to Regulation 13, which is accessible to all organisations, whether charitable or not. The phrase in Regulation 13(a) "meeting special needs for education training or welfare of persons on grounds of their sexual orientation" is a broad concept, in particular because of the inclusion of "welfare". On the assumption that Regulation 18 is there for some rational purpose, it suggests a wider purpose than merely the meeting of special needs of those in the beneficiary class.
82. My third reason is that some persons have special needs arising not from their own sexual orientation, but, for example, from the sexual orientation of their parents or children. Thus, the children (whether heterosexual or gay) of gay parents (whether by adoption, fostering or a lesbian relationship of the birth mother) may be subject to bullying and ridicule at school on the grounds of their parents' sexual orientation, regardless of their own. The temptation to abuse people by reference to the particular characteristics of their parents is as old as language itself. It would, to my mind, be irrational to suppose that Government or Parliament intended to exclude from Regulation 18 charities which served the special needs of such children. The Article 14 justification would not in my judgment be significantly less strong than in relation to the special needs of gay children.
83. Nor in my judgment can a restriction be placed upon the supposed purpose of Regulation 18 so as to confine its aim to the support of the special needs of a perceived minority class by reference to sexual orientation. Both Article 14 and the Regulations are structurally blind to the issue of majority or minority, although of course the fact that persons of a particular sexual orientation are in a minority may make it more easily justifiable to afford them special treatment.
84. I accept that it was no part of the purpose of Regulation 18 to give carte blanche to publicly funded faith-based adoption agencies to continue to deny their services to same-sex couples, simply by changing their charitable instruments during the transitional period. In particular, the respect for the religious beliefs motivating such faith-based adoption agencies would not be likely to constitute a justification of differential treatment in favour of heterosexual couples under Article 14 because of the essentially public nature of their activities, carried out to a significant extent on behalf of local authorities, and funded to a greater or lesser extent by them. In fact, as will appear, respect for the religious beliefs of the Roman Catholic Church formed no part of Mr McCall's submissions by way of an Article 14 justification for according to Catholic Care the protection of Regulation 18.
85. It would in any event be wrong in my judgment to attempt to divine the purpose of, or to interpret, Regulation 18 by reference to the Government's policy towards faith-based publicly funded adoption agencies which, although they were all charitable at the material time, formed only a tiny subset of the body of public benefit charitable activity potentially capable of falling within the confines of the charity exception. That focus would, to my mind, be to allow the tail to wag the dog.

INTERPRETATION OF REGULATION 18

86. The first question of interpretation is whether Regulation 18(1) applies only to differential treatment in the provision of benefits to the ultimate beneficial class of the charity in question. In my judgment it is not so limited. While such a limitation would have the purely adventitious advantage that it would exclude faith-based publicly funded adoption charities from making use of Regulation 18, it is otherwise neither logical, rational, purposive nor responsive to any reasonable linguistic interpretation of the language used.
87. Charities do not, strictly, exist to serve a beneficial class, they serve publicly beneficial purposes. Nonetheless, even if certain familiar types of charity may loosely be described as serving a beneficial class, it is by no means uncommon for them to achieve that purpose by conferring benefits on persons outside that class. For example, a charity for the relief of sickness may serve that purpose by providing benefits to nurses or to the hospital employing those nurses: see Re White's Will Trusts [1951] 1 All ER 528. A charity for the relief of the disabled may serve its purpose by providing respite care (for example holidays) for the relatives of the disabled who care for them at home. Similarly, Catholic Care and similar charitable adoption agencies serve needy children by making benefits available to prospective adoptive parents. It is a feature of the dependency caused by youth, sickness, disability and old age that relief can often best be achieved by conferring benefits on the carers rather than directly upon the cared.
88. I can envisage no logical or rational reason why Regulation 18 should provide a means for enabling justified differential treatment by reference to the sexual orientation of the ultimate beneficial class, while excluding any justified differential treatment of the carers of the beneficial class by reference to their sexual orientation, where the charity's purpose is achieved precisely by affording benefits to those carers.
89. I have already referred to the irrationality of permitting justified differential treatment by a charity set up to provide counselling for gay teenagers, while denying it to a charity set up to provide counselling for the teenaged children of gay parents, regardless of the children's sexual orientation. It is equally irrational to permit justified differential treatment of such children by a charity set up to provide them with counselling, while denying it to a charity set up to provide their gay parents with the advice and support sufficient to enable them to assist their children.
90. That irrationality is not illustrated merely by that example. The same focus on the provision of benefits pursuant to a charitable instrument appears in the Sex Discrimination Act 1975, the Race Relations Act 1976 and in the Disability Discrimination Act 1995. It will shortly become the standard basis of the charity exception applicable to all fields of discrimination, if the Equality Bill becomes law. To confine the charity exception only to charities which provide benefits directly rather than indirectly would be as illogical in other fields of the regulation of discrimination as it is in relation to sexual orientation. For example, a charity for the care of disabled children would be an obvious candidate for exception under section 18C of the Disability Discrimination Act 1995, but it would be illogical to exclude a charity for the provision of assistance to the children of disabled parents, where it achieved its purpose by providing training designed the better to enable those parents to care for their children. The parents would not be the ultimate beneficial class, but the Article 14 justification for limiting such indirect benefits by reference to their disability is plain and obvious.
91. In agreement with the Tribunal, I find it impossible to discern any linguistic basis for treating the concept of the provision of benefits in pursuance of a charitable instrument as confined in the manner contended for by the Commission. While I acknowledge that, as an exception, it is in principle to be construed narrowly, this form of restriction fails even to serve the particular reason for giving Regulation 18 a limited effect, namely to avoid charities being able to discriminate in circumstances which could not sensibly constitute justification under Article 14. As I shall seek to demonstrate, that form of limitation can easily be arrived at by a straightforward, but very different, interpretation of Regulation 18.
92. The second question is whether the Tribunal's interpretation, limiting Regulation 18 to an elusive field of pure private charitable activity which is neither forbidden by, nor within the contemplation of, any other Regulation, is any better than the Commission's interpretation. In my judgment it is not. Its first and most serious difficulty is that it seeks to set on its head the opening phrase in Regulation 18(1) "Nothing in these Regulations shall make it unlawful …", by limiting Regulation 18 to activity which is not prohibited by any other Regulation.
93. Secondly, the Tribunal's views (at paragraphs 57 and 74 of the Preliminary Ruling) that Regulation 18 deals with a wholly different sphere of activity from other Regulations, so that they are mutually exclusive, is to my mind untenable. For example, there is on any view a large overlap between the subject matters of Regulations 13 and 18, and it is not difficult to think of charities which, because they are not acting on behalf of a public authority under contract, could at one and the same time qualify for exemption under Regulations 14 and 18.
94. Thirdly, the notion, lying at the heart of the Tribunal's analysis, that Regulation 18 is in some way confined to purely private activity seems to me to lie uneasily with the essential requirement of a charity, namely that it should confer a public benefit. Returning to my examples of the charities for the provision of counselling to gay teenagers or the children of same-sex parents, it is not obvious why their clear justification (in Article 14 terms) should depend under Regulation 18 on them being privately funded.
95. The Tribunal's interpretation found no support, even in the alternative, among any of the parties to this appeal, including for that purpose the EHRC. While that has added to my confidence that the Tribunal's interpretation is not correct, it does not constitute the sole or even main basis for my rejection of it.
96. The third and remaining question is how nonetheless Regulation 18 is to be confined by way of interpretation so as to avoid it transgressing the real restrictions imposed by the requirement to construe it compatibly with Convention rights, and in particular with the jurisprudence about Article 14. In my judgment the answer is to be found in three elements of Regulation 18. The first is the restriction (unique to Regulation 18 among these Regulations), that it applies only to charities. The second lies in the fact that, as expressly contemplated by Regulation 18(2), the practical effect of Regulation 18 is controlled by a public authority, namely the Charity Commission, as regulator. The third is, as I have described in relation to section 43 of the Sex Discrimination Act 1975, that even without an express reference to the need for the proportionate pursuit of a legitimate aim, a Convention right compatible interpretation of Regulation 18 requires that limitation to be implied. I will take each of those elements in turn.
97. An organisation which proposes to fulfil a purpose for the public benefit will only qualify as a charity if, taking into account any dis-benefit arising from its modus operandi, its activities nonetheless yield a net public benefit: see above. Thus, a charity which proposed to apply differential treatment on grounds of sexual orientation otherwise than as a proportionate means of achieving a legitimate aim might thereby fail to achieve charitable status (or lose it, if it sought to pursue such activities by amendment of its objects).
98. Miss Mountfield for the EHRC sought to persuade both the Tribunal and me that no purpose incompatible with the Human Rights Convention could ever be for the public benefit, so that no body which existed for the pursuit (inter alia) of such a purpose could be exclusively charitable. For the reasons given in paragraphs 66 to 71 of its Preliminary Decision, the Tribunal was disinclined to accept that submission, although it did not find it necessary finally to rule upon it. A particular obstacle was, in the Tribunal's view, constituted by the fact that charities were not public bodies, so that to enforce strict compliance with the Convention by a re-definition of the boundaries of charitable status might extend the ambit of the Convention in an unintended direction.
99. For the purposes of ruling on the preliminary issue it is not necessary for me finally to decide this point either. The essentially public (rather than private) benefit which underlies the concept of charity leaves me less concerned than was the Tribunal about the notion that an acceptance of Miss Mountfield's submission might extend the Convention beyond its proper field. Nonetheless the relatively brief argument on this point left me unsure that a precise equation between the definition of charitable status and justification under Article 14 (where the potential obstacle was the differential treatment of the recipients of benefits) would not give rise to unintended and inappropriate consequences. It is sufficient for my purposes to conclude, as I do, that the public benefit requirement inherent in charitable status would be sufficient in most such cases to prevent Regulation 18 having a scope that made it incompatible with Convention rights, precisely because of the large public dis-benefit likely to flow from any unjustified, and therefore discriminatory, differential treatment.
100. To the extent that there is a potential gap between the confines of charitable status and the limits of the concept of justification under Article 14, it seems to me that the Charity Commission's regulatory powers, expressly recognised as applicable under Regulation 18(2), are sufficient to fill it.
101. At paragraph 68 of its Preliminary Decision the Tribunal noted a submission by the EHRC that the concept of what was "expedient in the interests of the charity" under Regulation 18(2) might be sufficiently different from the concept of what might be justified under Article 14 of the Convention, for the Commission's regulatory role to be an inappropriate basis for ensuring that Regulation 18 operated in practice in a manner compatible with Convention rights. Like the Tribunal, I doubt whether that difference of language is of any real or practical consequence. I find it difficult to imagine circumstances where the Commission, properly directing itself, could conclude that it was expedient in the interests of a particular charity to exercise its regulatory powers so as to allow it to act in a manner incompatible with Convention rights under Article 14. For as long as the matter in question was the charity's wish, by its charitable instrument, to require itself to confer benefits by reference to differences in sexual orientation, I consider that the expediency test under Regulation 18(2) and the justification test under Article 14 would go hand in hand. While there might of course be cases in which a justified difference in treatment (under Article 14) might nonetheless be inexpedient in the interests of the charity, I cannot envisage how an unjustified differential treatment would be expedient.
102. I concluded earlier in this judgment that even prior to the amendment of section 43 of the Sex Discrimination Act 1975, to include an express reference to the justification test under Article 14 (by the phrase "unless the conferral of benefits is … a proportionate means of achieving a legitimate aim …"), such a limitation was probably implicit in any Convention compatible interpretation of that section. In my judgment the same result is substantially achieved by the interpretation of Regulation 18(2) which I have just described.
103. It is at least conceivably possible that an existing charity with a charitable instrument that required it to confer benefits only to persons of a particular sexual orientation would qualify for exception under Regulation 18 without any need to amend its charitable instrument, and without thereby losing its charitable status, so that no occasion for the regulatory intervention of the Charity Commission would arise under Regulation 18(2). That scenario might leave open the possibility that such a charity would operate in a manner not justified under Article 14, which the Commission would be powerless to prevent. I have not myself identified any qualifying example, and the matter was not pursued during submissions. Were it possible, I would regard the recognition of an implied restriction in Regulation 18 of the type introduced by amendment into section 43 of the Sex Discrimination Act 1975 as sufficient to close off that loophole. It appears that it will in any event be closed off if the present Equality Bill becomes law, since that express limitation will apply to the general form of charity exemption, applicable both to sexual orientation and all other forms of prohibited discrimination.
104. That concludes my analysis of the interpretation of Regulation 18. It applies potentially to all types of benefit provided to persons of a particular sexual orientation in pursuance of a charitable instrument, whether or not they are the supposed ultimate beneficial class of that charity. It is not as a matter of interpretation confined to any elusive field of purely private charitable activity, unaffected by any of the other Regulations. Nonetheless it is by implication limited to the provision of benefits on the basis of differential treatment which would be justified under Article 14, and in most cases (including the present) but not necessarily all, the regulatory powers of the Charity Commission would be sufficient to ensure that Regulation 18 conferred no exemption in relation to unjustified discrimination.

THE APPLICATION OF REGULATION 18 TO CATHOLIC CARE

105. Miss Mountfield submitted that, regardless of the outcome of the issues as to the interpretation of Regulation 18, the adoption of the Proposed Objects by Catholic Care could not possibly be justified under Article 14, so that the Tribunal was nonetheless still correct to answer the preliminary issue in the negative. The gist of her argument was that religious belief (in the form of the tenets of the Roman Catholic Church) could not possibly justify the denial of Catholic Care's adoption agency services to same-sex couples, since it was a manifestation of non-core beliefs in an essentially public sphere, being both funded in part by, and carried out in part on behalf of, a public authority.
106. If the justification put forward by Catholic Care was indeed the need to respect the beliefs of the Roman Catholic Church, I would agree with that submission, save only that I would regard it as unnecessary to have to decide whether the beliefs in question did or did not form part of the core tenets of Roman Catholic faith and doctrine. There was evidence before the Tribunal from the Roman Catholic Bishop of Leeds that they did, from which I would be slow to depart without compelling grounds.
107. Mr McCall for Catholic Care steadfastly and in my judgment wisely abjured any such basis for justification under Article 14. While he accepted that the tenets of the Roman Catholic Church were the cause of the charity's wish to apply differential treatment, the justification upon which he relied ran as follows:

i) For many years ending in 2008, Catholic Care provided adoptive parents chosen by local authorities for approximately ten children per annum.

ii) For those children, usually of the "hard to place" category, Catholic Care was the adoption agency of last resort for the local authorities concerned, whose practice was to have recourse to Catholic Care only when all other avenues for the identification of willing and suitable adoptive parents had failed. But for Catholic Care's work in that field, those children would therefore not have been adopted that year or, probably, at all.

iii) Catholic Care was one of a small number of publicly funded faith-based adoption agencies for which, during the transitional period afforded by Regulation 15, it had proved impossible to identify any avenue (other than via Regulation 18) for continuing its adoption agency services. It was therefore faced with the stark choice of complying with Regulation 18 by adopting the Proposed Objects, or closure of its adoption service. Since more than 90% of its work consisted of other charitable activity, supported and funded to a substantial extent by contributions from within the Roman Catholic Church, the severing of its ties with that Church was wholly impracticable.

iv) Accordingly, the continuation of its service involving the inevitable denial of its adoption agency services to same-sex couples was justified within Article 14. It served the legitimate aim of providing suitable adoptive parents for a significant number of children who would otherwise go un-provided for. The consequential differential treatment by reference to the sexual orientation of prospective adoptive parents was a proportionate means of achieving that legitimate aim, since there were other agencies willing to provide similar services to same-sex couples, and since the choice of appropriate parents for any particular child was made not by Catholic Care, but by the relevant local authority, in conjunction with the court. Same-sex couples would therefore neither be deprived of any significant benefit (not least since the only alternative of closure would make that benefit unavailable anyway), nor would they be disadvantaged in any competition with heterosexual couples for choice as the adoptive parents for any particular child.

v) Since any competition between the interests of the children and the interests (including the human rights) of prospective adoptive parents could only be properly resolved in favour of the children, the Article 14 justification was plain and obvious.

108. The evidence adduced before the Tribunal was in my judgment sufficient to display a prima facie case on the facts for each of the steps in the justification analysis advanced by Mr McCall. Nonetheless that evidence had not been deployed for the purposes of enabling the Tribunal, still less the Commission, to do more than decide the preliminary issue. Since both the Tribunal and the Commission had decided that issue on interpretative grounds which made it unnecessary for either of them directly to decide the question of justification, a decision on that question by this court would involve the determination of partly factual questions de novo in the course of a second appeal, limited to a point of law. Even if the factual analysis was indisputable, the question whether it would constitute the particularly clear and weighty reasons required for justification under Article 14 is by no means straightforward.
109. Though each of Mr McCall and Miss Mountfield laboured hard and persuasively for the opposed conclusions that the adoption of the Proposed Objects was obviously justifiable, alternatively obviously not justifiable, I have found myself driven to neither extreme. On the one hand, Miss Mountfield's submission that differential treatment which is not founded on the special needs either of the proposed adoptive parents or the children, or upon any other class of justification recognised by the developing jurisprudence on Article 14, must be discriminatory commands real respect. On the other hand, the very unusual predicament of Catholic Care, its status as an adoption agency of last resort for "hard to place" children and the arguably pre-eminent needs of those children who will otherwise be left unadopted may constitute a very special and unusual case for recognition under Article 14, quite unlike any other to be found in the existing jurisprudence, but none the worse for that.
110. Mr Pearce's submission that, if the analysis gets this far, the question of justification should be referred back to the Charity Commission is one which I find to be compelling. On my interpretation of Regulation 18, the Commission is the body charged by Parliament with the task of carrying out that analysis. Provided that it directs itself (or is directed) correctly in law, it is better resourced and in my judgment better placed than the court to perform that difficult function, at least first time round. The only reason why it has not thus far discharged that function is that, in its search for a ready means of confining Regulation 18 so as to avoid it becoming a carte blanche for publicly funded faith-based adoption agencies, it has alighted upon what I have considered to be the wrong interpretation of Regulation 18, so that the carrying out of the justification analysis appeared, incorrectly, to be unnecessary. I have no reason to suppose that, directed as to the true interpretation of Regulation 18, the Charity Commission will not properly be able to carry out that analysis, either on the facts thus far proved, or upon the basis of such further evidence as it may consider necessary and appropriate to take into account.
111. I therefore propose to direct that the question whether Catholic Care should be permitted to adopt the Proposed Objects be remitted to the Charity Commission to decide, directing itself in law in accordance with the principles set out in this judgment. Since Catholic Care is at present obliged to retain paid staff with a decreasing workload while this issue remains undecided, I consider that it should now be resolved with as much expedition as the circumstances permit. I will hear submissions as to an appropriate form of order.