Resolving charity and trustee conflicts
Charities, like other organisations, may be involved a wide range of potential disputes, from contractual arguments with their suppliers, insurers or landlords, to issues regarding their intellectual property.
However, charities, unlike commercial entities, are also subject to specific rules in relation to bringing or defending legal action, which, if not followed, can have serious consequences for the charity and its trustees.
Charity and trustee disputes
The involvement of the Charity Commission
The first question for any charity when considering whether to bring or defend a civil claim, is whether the matter requires the involvement of the Charity Commission.
For disputes concerning the internal governance of the charity (e.g. disputes between trustees), known as charity proceedings, the authorisation of the Charity Commission is needed.
For other charity disputes, such authorisation is not legally required, however, the Charity Commission still sets out strict standards to which charities and their trustees must adhere.
Legal action taken by trustees must be in the best interests of the charity
The first and overarching requirement is that any legal action must be in the best interests of the charity. Indeed, trustees are legally required not merely to act in the charity’s best interests, but to be able to show that they have done so.
This means balancing their duties to protect and recover the charity’s assets, against the potential damage to the charity’s reputation and the costs involved in any legal action.
Whilst the Charity Commission guidance makes clear that any legal action should be a last resort, it also states that if a charity lacks:
“the necessary in house expertise, in order to make a proper decision it will usually be appropriate to take and consider professional legal advice.”
In fact the legal advice should aid the charity in not only considering the appropriateness of bringing or defending a claim, but also help set out the potential alternatives to resolve the dispute. In other words, it should assist the trustees in making the best decision for the charity, and enable them to show that they have abided by their obligations in doing so.
If a charity does seeks legal advice it is imperative that the advice be appropriate.
Charity litigation and trustee disputes – how our solicitors can help
- Internal disputes between trustees
- Making applications to the Charity Commission to commence legal proceedings
- Beddoe applications – an application made to the Court by the trustees of a charity to become involved in litigation
- Disputes between charities and its suppliers, insurers, clients or landlords
- Fraud and asset recovery
- Debt recovery
- Insolvency and restructuring
- Intellectual property disputes
Our team of charity solicitors is highly recommended by the independently researched, Legal 500, for the services we can provide to charities and trustees.
We work with charities across the country to resolve disputes at the earliest possible stage through negotiation or other forms of alternative dispute resolution, such as mediation.
Court action is a last resort but, if a case gets there, our team puts forward the best possible case, never losing sight of the charities objectives.
For more information on how our expert team of commercial litigation solicitors can assist your charity or help resolve a trustee dispute, please call 0800 024 1976 or contact us via our online enquiry form for a guaranteed response.
"The team is well briefed, competent, polite and efficient at all times."Client Feedback
"Nelsons Solicitors Limited’s ‘very efficient' group 'operates with knowledge and understanding’ of a broad range of charities. It demonstrates strength in employment, property, IT, trusts, financial, corporate and education matters."Legal 500