The Office of the Scottish Charity Regulator (OSCR) has decided not to appeal against the decision of the Scottish Charity Appeals Panel in the case of St Margaret's Children and Family Care Society -v- Office of the Scottish Charity Regulator (Case ref: APP 02/13), which was delivered on 31st January 2014. The case so far is the only Scottish case which touches on the question of equality and the public benefit test.

The charity is an adoption agency which operates within the ethos of the teachings of the Roman Catholic Church. The requirement to work within the teachings of the Roman Catholic Church is written into the charity's constitution.

Following a complaint by a third party, OSCR carried out an investigation into the activities of the charity and reached the view that the charity was not providing public benefit. This was on the basis of a statement on the charity's website that they gave priority in the dispensing of benefits to people who had been married for at least two years. OSCR interpreted this as direct discrimination against same sex couples, who at present in Scotland are unable to marry (although this is about to change following the passing of recent legislation through the Scottish Parliament). As a result, OSCR considered the charity to be discriminating unlawfully in breach of the Equality Act, and therefore to have failed the public benefit test and to have failed the charity test. OSCR gave the charity directions to adjust its activities in order to bring it within the terms of the charity test.

The charity appealed the decision of OSCR to the Scottish Charity Appeals Panel and the decision published at the end of January found in favour of the charity, quashing the directions from OSCR.

In its decision, the Appeals Panel reached the conclusion that the charity is more than an adoption agency per se and that the whole purpose of the charity is the manifestation of its religion and the religion of its members and supporters. This is stated clearly in the charity's objects clause where the activities are set out as being"in accordance with the teachings of the Catholic Church". In addition, the Appeals Panel took into account the fact that the charity was in the main supported by personnel who are clergy or laity of the Catholic Church. Nevertheless, the Appeals Panel heard in evidence from the charity that it sought 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 take part in its decision making process. In addition, the charity demonstrated to the Appeals Panel that it did give advice to same sex couples wishing to adopt, although by its own admission it would not place children for adoption with same sex couples, since that strayed outwith the teachings of the Catholic Church.

The Appeals Panel decided that there was indirect discrimination but that the indirect discrimination was allowed in terms of the Equality Act because it was a proportionate means of achieving a legitimate aim. The Appeals Panel found that both the charity exemption and the religious exemption contained in the Equality Act applied.

As a result of these findings, the Appeals Panel judged that the charity did meet the terms of the public benefit test as set out in the Charities and Trustee Investment (Scotland) Act 2005 as amended, and that the charity test was therefore satisfied in relation to the charity's objectives and activities. The action taken by OSCR was considered by the Appeals Panel to be a disproportionate regulatory measure since the charity would have been obliged to close in the event that the direction could not be met. The OSCR direction presented a serious difficulty for the charity given the objectives set out in its constitution, and given the identity of its members and supporters. The appeal decision also noted that there would be a net loss to the community if the charity closed, since the charity currently deals with approximately 10% of all adoptions in Scotland.

The decision of the Scottish Charity Appeals Panel in the St Margaret's case demonstrates the different approach which is taken in Scotland when compared to Catholic Care (Leeds) and other similar cases in England and Wales, and emphasises the importance of a number of different factors when determining whether a charity passes the public benefit test in Scotland.