The First-Tier Tribunal (General Regulatory Chamber) (the ‘Tribunal’) allowed an appeal in part against a decision of the Charity Commission, regarding the appointment and management of Interim Managers to the exclusion of the trustees of Mountain of Fire and Miracles Ministries International (the ‘Charity’).
Background
The Charity’s objects are to ‘propagate Christianity’ and it operates as the UK branch of a worldwide Pentecostal movement.
In 2018, the Commission opened a statutory inquiry into the Charity. In 2019, the Commission issued a section 76 Order in 2019 appointing an Interim Manager to the Charity. In 2021, the Commission notified the Charity trustees that it would continue the appointment of the Interim Manager to the exclusion of the trustees of the Charity, via a new order (the ‘2021 Order’).
The trustees appealed this decision, holding that the actions of the Commission were generally unlawful; the operations and actions of the Interim Manager and the Commission were procedurally unfair; and the decisions of the Interim Manager and the Commission were generally irrational.
The trustees sought to have the 2021 Order set aside. In addition, although the trustees envisioned continuing to work with an Interim Manager, they requested the replacement of the current Interim Manager as the trustees argued that there had been a breakdown in confidence in the relationship. The Commission rejected the trustees’ argument and the 2021 Order was issued.
The Initial Order had required the Interim Manager to discharge the following specific functions. To:
- undertake a review of the Charity’s financial processes, structures and resources and the extent to which the trustees complied with their statutory reporting duties to submit accurate accounts and reports by the due date;
- undertake a review of the Charity’s governance and administration including the management of potential conflicts of interests;
- review all serious incidents that constitute adverse events, whether actual or alleged;
- undertake a review of the three “branches” of the Charity where proper administration was in doubt; and
- make recommendations for actions required to improve the governance of the Charity.
Controversially, the 2021 Order extended the responsibilities of the Interim Manager, to include:
- taking over the management and administration of the Charity to the exclusion of the trustees, (with the exception of the Charity’s religious services and ministry);
- ensuring full oversight and authorisation of all charity expenditure over £500;
- undertaking a full review of the Charity’s property, asset position and HR records to strategise how to contract the Charity’s branch structure whilst planning the most appropriate future governance structure of the Charity; and
- reporting progress to the Charity Commission on a regular basis.
The appeal centred on the appointment of the Interim Manager: the trustees did not dispute the opening of the statutory inquiry, the terms of the initial order, nor that there had been misconduct or mismanagement in connection with the Charity in the past. Trustee misconduct ranged from persistent non-compliance with trustee obligations and breaches of governing documents, to failure to submit serious incidence reports in a timely manner and failure to account for financial discrepancies.
The question posed to the Tribunal was whether it was proportionate and in the best interests of the Charity to appoint the Interim Manager to the exclusion of the trustees. The Tribunal was to decide (1) whether to continue the appointment of the Interim Manager and, (2) if so, on what terms.
Tribunal Decision
The appeal was allowed in part. The Tribunal held that it was in the best interests of the Charity to continue the appointment of the Interim Managers, based on the misconduct, mismanagement and governance issues evident in the Charity.
However, the Tribunal recognised that the exclusionary order had not worked to the benefit of the Charity as the Interim Managers were unable to act without the support of the trustees. The Commission was ordered to modify the 2021 Order to reflect the Tribunal’s findings.
Implications for Charity Trustees
- The case reiterates the axiom of Charity governance that the best interests of the charity must be considered in priority at all times and in all circumstances.
- In addition, the case highlights the importance of good governance. Trustees must abide by their obligations under the law and the governing documents of their charity.
- Failing this, upon implementation of assistance by the Charity Commission, trustees must work to meet objectives set by the Commission, including specifically collaborating with Interim Managers, for the benefit of the Charity.
For full details of the case, see here.
For further information, please contact:
Chris Priestley, Partner, Withersworldwide
chris.priestley@withersworldwide.com
