The Children's Investment Fund Foundation (UK) v Attorney General & Ors

The court considered an application by CIFF for approval to make a US$360 million grant to Big Win Philanthropy (BWP). Central legal questions were whether the payment was a "material benefit" to a trustee under clause 5.2 of CIFF's memorandum, whether the payment was a "payment for loss of office" within the meaning of section 215 Companies Act 2006 so as to trigger members' approval under section 217, and what jurisdiction the court and the Charity Commission had to authorise or require member assent.

The Chancellor held that (i) the trustees had surrendered their discretion to the court, (ii) the Grant would confer a material benefit on Ms Cooper within clause 5.2 and therefore required Charity Commission approval, (iii) the Grant fell within section 215 as a payment in connection with Ms Cooper's retirement and was to be paid to a person connected with her (BWP) so a section 217 members' resolution was required, (iv) Sir Christopher and Ms Cooper were contractually bound not to vote, and (v) in the exceptional facts of the case the court would approve the Grant and, subject to the Commission's consent, direct the sole unconflicted member to vote in favour of the requisite section 217 resolution.

This is a first-instance charitable company case. CIFF sought the court's approval to make a US$360 million grant to a new charity, BWP, founded by a former trustee, Ms Jamie Cooper. The Charity Commission had authorised CIFF to apply to the court under section 115 Charities Act 2011. The Grant formed part of a package of April and July 2015 agreements between CIFF members (including the donor Sir Christopher Hohn and Ms Cooper) that also included covenants to give US$40 million each to BWP and Ms Cooper's irrevocable resignation as a trustee and member of CIFF contingent on approval of the Grant.

(i) Relief sought: declaratory and consequential orders approving the proposed Grant and directing how any required member approval should be obtained.

(ii) Issues framed by the court:

• whether trustees had surrendered their discretion to the court;
• whether the Grant would confer a "material benefit" on Ms Cooper under clause 5.2 of CIFF's memorandum requiring Charity Commission written approval;
• whether the Grant was a payment for loss of office under section 215 Companies Act 2006 and so required member approval under section 217;
• whether particular members were deprived of voting rights by fiduciary duties or contract;
• whether court approval could substitute for or abrogate the need for Commission or members' approval; and
• what factors, including tax risk, the court should weigh in deciding whether to approve the Grant.

(iii) Court's reasoning (concise): the Chancellor determined that the trustees had, in effect, surrendered their discretion to the court and that the Grant would be a "material benefit" to Ms Cooper for purposes of clause 5.2. He concluded on the evidence that the Grant was made in consideration for and in connection with Ms Cooper's retirement from office and that BWP was a body corporate with which she was connected (as sole member), so the payment fell within section 215 and required a section 217 members' resolution. The April agreements and accompanying documents created contractual undertakings that Sir Christopher and Ms Cooper would not vote; the court joined the previously unjoined member, Dr Marko Lehtimaki, and found he remained the sole eligible voter. After balancing factors (finality of governance, securing a further US$40m contribution, CIFF's interests and the particular facts), the court approved the Grant. The court held the Charity Commission must still give its statutory consent under clause 5.2 and section 201, but in the exceptional circumstances directed the sole unconflicted member to vote in favour of any required section 217 resolution to give effect to the court's decision. The court also recorded HMRC had provided conditional clearance on tax consequences but had reserved its position depending on final approval processes.

The court approved the Grant (the application succeeded). Rationale: trustees had surrendered their discretion to the court; the Grant would confer a material benefit on Ms Cooper under clause 5.2 and would constitute a payment for loss of office within s.215 Companies Act 2006, so required members' approval under s.217; Sir Christopher and Ms Cooper were contractually bound not to vote; in the exceptional circumstances the court, after weighing finality, charitable benefit and securing a further US$40m, exercised its jurisdiction to approve the Grant and (subject to the Charity Commission's consent) directed the sole unconflicted member to vote in favour of the members' resolution.