The charity tribunal is to use its powers to vary a Charity Commission scheme for the merger of two independent schools on the grounds that it creates "unnecessary risks and restrictions" that hamper the effective use of charity property.
Last year the commission allowed the King Edward VII and Queen Mary School in Lytham St Annes in Lancashire, run by the Lytham Schools, to merge with the Arnold School, run by the United Church Schools Trust, in nearby Blackpool.
A decision by the tribunal, chaired by judge Peter Hinchcliffe, said the merger was appropriate under rules set out in the Charities Act 1993, allowing two charities to merge if charitable assets could be used more effectively together.
But the tribunal said the commission had placed too much emphasis on the financial survival of KEQMS, rather than its need to be more effective in advancing education for the public benefit. It said the terms of a lease agreed between the two charities "create an unnecessary risk of conflict" with the objects of the Lytham Schools.
It concluded that "the terms of such a scheme create unnecessary risks and restrictions with regard to the effective use of the property of the charity" and said it would exercise its power to vary the scheme approved by the commission. It did not say what changes it would make.
The Lytham Schools had pursued the merger to preserve KEQMS in the face of falling pupil numbers, a tribunal hearing in April was told.But this attracted complaints from alumni and parents whose children attended the school, two of whom, Raymond Aliss and Martin Hesketh, brought the case to the charity tribunal, saying that the scheme should not have been allowed to go ahead.
A Charity Commission spokeswoman said: "The commission recognises that the tribunal has upheld our decision subject to certain proposed amendments to the scheme. We will now be looking at how this judgment can help inform our future work."
Nobody at the school was available for comment.