Rupert Earle and Rosamund McCarthy of Bates Wells Braithwaite and Helen Mountfield QC acted for Joseph Rowntree Charitable Trust in JRCT’s appearance before the Divisional Court as an interested party in judicial review proceedings brought against the Charity Commission by CAGE Advocacy UK Ltd.
CAGE, which had previously been the recipient of funding from JRCT, was the subject of extensive media coverage earlier this year. As a result, the Charity Commission sought assurances from various charities that they were not funding and would not fund Cage, and required from JRCT an “unequivocal assurance” that JRCT “will not fund CAGE either now or in the future”, despite knowing from JRCT that no trust property was at risk. Under the threat of imminent serious regulatory action (ie a statutory inquiry) and personal liability and in order to protect the interests of its grantees and other work, the trustees gave the assurances demanded (see the summary of the Commission’s regulatory action in its public statement of 6 March here)
JRCT had grave concerns about the implications such an imposition would have on the ability of trustees to exercise their fiduciary powers and duties. Upon discovering that CAGE had applied for permission to bring proceedings for a judicial review of the Commission’s actions, JRCT therefore sought permission to participate as an interested party on the basis that it would neither seek, nor bear anyone else’s legal costs. On 23 July Lord Justice Burnett and Mr Justice Holroyde granted permission to proceed.
The Commission’s position in the litigation was that it had done no more than offer advice, and that it had not intended that JRCT’s trustees should fetter their discretion. JRCT’s position was that the Commission had given a direction, beyond the Commission’s powers in the Charities Act 2011, to just that effect. At a hearing on 21 October 2015, the Lord Chief Justice Lord Thomas (sitting with Mr Justice Ouseley), was highly critical of the “ludicrous time limits” under which the Commission had required the assurances to be given, said he could understand how it was felt that the “Commission had behaved in an extremely high handed manner” and acknowledged that JRCT had “real cause for complaint”. The Lord Chief Justice also noted that “it is the duty of any institution to withstand pressure from the media” and that the Commission should have spent more time “talking, as people normally do” at the start of the dispute “and not issuing ultimatums”, particularly when dealing with a “reputable body” such as JRCT.
The Lord Chief Justice observed that the Commission’s position that it had not sought to fetter the discretion of JRCT for all time irrespective of changed circumstances was ‘wholly inconsistent’ with the summary of its regulatory action in its press release and ‘that in every well run organisation press statements are approved at the highest level’. Subsequent explanations of the Commission’s actions given by its Chief Executive and Chairman, including to a Government Minister did not resile from the press statement. Upon being pressed by the Lord Chief Justice as to why the Commission had not clarified its position prior to the litigation being brought against it, Mr Milford, counsel for the Commission “accept[ed] that there was an opportunity to correct the position, and we did not so. I cannot say anything else”.
Assisted by such indications of the Court’s thinking, agreement was reached to settle the action. The Commission recognised that, “it has no power to require trustees to fetter the future exercise of their fiduciary powers under its general power to give advice and guidance” and that “there is no obligation on the trustees of JRCT to fetter the proper and lawful exercise of their discretion in future” (see the agreed settlement wording in the Court Order here). Each party bore its own costs.
The Charity Commission has thus confirmed that it does not have the power, in giving advice or guidance, to require grant making trusts, foundations or other funding bodies to fetter their discretion as to funding decisions that they may wish to make in the future in line with changing circumstances.
Bates Wells Braithwaite
5 November 2015
Posted on 05/11/2015 in BWB NewsBack to Knowledge