Charities are regulated by the Charity Commission pursuant to the Charities Act 2011. When a charity becomes involved in a dispute, they must first consider whether any involvement/approval from the Charity Commission is necessary. Some confusion can be caused by the wording of Part 64 Civil Procedure Rules (CPR), which states:
“Application for permission to take charity proceedings
64.6(1) An application to the High Court under section 33(5) of the Act for permission to start charity proceedings must be made within 21 days after the refusal by the Commissioners of an order authorising proceedings.”
This raises the obvious question as to what proceedings amount to ‘charity proceedings’ for the purposes of Part 64 CPR. This is defined in Part 64.5 CPR as having the same meaning as set out in Section 33(8) of the Charities Act 1993. Section 33(8) states:
“In this section “charity proceedings” means proceedings in any court in England or Wales brought under the court’s jurisdiction with respect to charities, or brought under the court’s jurisdiction with respect to trusts in relation to the administration of a trust for charitable purposes.”
The importance of defining charity proceedings
The importance of defining of charity proceedings does not only relate to Part 64 CPR and the time limits contained therein. Section 33 of the Charities Act 1993 also sets out that if proceedings are charity proceedings for the purpose of that section, a charity may only proceed with them through the Courts if the Charity Commissioners provide their authorisation. The definition in section 33 does little in my view to clarify whether the Charities Commission are required to authorise, for example, defence of a claim brought against a charity beneficiary to a deceased person’s Will to challenge the validity of that Will.
The Charity Commission helpfully published guidance in August 2016, which sets out clearly their understanding of the legal framework within which charities operate. That guidance contains the following easy to understand paragraphs:
“The decision about whether or not to initiate or defend proceedings on behalf of a charity is a matter for the charity trustees, acting exclusively in the best interests of the charity, having considered whether
or not some other course of action may be open to them. The commission has no jurisdiction to resolve civil disputes between charities and third parties. In addition, it has no jurisdiction to determine legal or
equitable title as between charities and third parties (see section 70(1) of the Act)…Its permission is not required for the taking of legal proceedings by or against a charity (other than ‘charity proceedings’ relating to the internal affairs of a charity…”
This guidance provides clear confirmation that, where a charity finds themselves embroiled in a civil dispute, the Charity Commission’s permission is not required for the charity to defend or pursue those proceedings. This does not alter the obligation on trustees to a charity to make a full assessment about the merits of a claim but it is certainly one less thing for them to worry about.
How Nelsons can help
Kevin Modiri is a Partner in our expert Charity team.
Should you have any issues relating to the matters contained in this article, please do not hesitate to contact Kevin or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.