Garcha & Ors v The Charity Commission for England and Wales

When considering an application under section 115(5) of the Charities Act 2011, the court exercises an original jurisdiction. A Charity Commission refusal is evidence entitled to respect, but does not determine the application.

The proposed claim must be legally sustainable and brought in good faith. Those conditions are necessary but insufficient. The court must consider whether litigation is the least unsatisfactory course, having regard to the charity as a whole and the risk of resources being consumed by internal disputes. The court may consider the wider dispute, not merely the immediate relief sought.

The claimants, members of the executive committee of a registered charity, sought permission under section 115(5) of the Charities Act 2011 to commence proceedings against members of a former committee. The proposed proceedings sought delivery up and inspection of solicitors’ files relating to earlier litigation involving the charity, with a view to investigating recovery of legal costs paid from charity funds.

The Charity Commission had refused consent. The central issue was whether the court should authorise the proposed proceedings, having regard to the sustainability and good faith of the claim and to the charity’s interests.

1. The application was refused. The court exercised its original jurisdiction under section 115(5) of the Charities Act 2011, rather than reviewing the Charity Commission’s decision on appeal. The Commission’s refusal was evidence entitled to respect because of its expertise.

2. The proposed claim had to be legally sustainable, meaning that it had a real rather than fanciful prospect of success, and had to be advanced in good faith. Those were necessary but not sufficient conditions. The statutory filter existed to prevent charity resources being frittered away on internal disputes. Ultimately, litigation had to be shown to be the least unsatisfactory course in the interests of the charity as a whole.

3. The court considered the precise proceedings proposed, but was not confined to the immediate application for delivery up of documents. The wider dispute was whether the former committee could be required to make restitution for legal costs paid from charity funds. A claim based on negligent conduct of the earlier litigation was speculative. A claim alleging that the former committee acted improperly in defending proceedings was also unlikely to succeed, given the existence of a real issue, the compromise approved by the Attorney General and the claimant’s agreement to the costs arrangements.

4. The proposed investigation into the amount of the solicitors’ costs raised points of some weight, including the absence of evidence that the invoices had been scrutinised or that the Attorney General’s agreement had been obtained. Nevertheless, the prospects of proving that the costs were unreasonable were remote. The statutory time limits governing assessment under sections 70(3) and 70(4) of the Solicitors Act 1974 presented a further difficulty. The least unsatisfactory course was therefore not to pursue the dispute.

5. The judge also held that an extemporary judgment could be reconsidered before any order had been formally pronounced or drawn up. That jurisdiction permitted correction of a material mistake and was consistent with the duty to deal with cases justly under rule 1.1 of the Civil Procedure Rules 1998. On reconsideration, the identified error did not alter the result.

Permission to commence proceedings for delivery up of the legal files was refused.

This was a first-instance application. The Charity Commission had refused permission for the proposed proceedings, and the High Court independently refused authorisation under section 115(5) of the Charities Act 2011.