Hussain & Anor v Chowdhury & Ors

Permission to bring charity proceedings under section 115(5) of the Charities Act 2011 should not be granted merely because the proposed claim is legally sustainable. The court must consider whether litigation is the best, or least bad, course in the interests of the charity as a whole. The court exercises its own jurisdiction and is not an appellate tribunal reviewing the Charity Commission’s decision. A refusal by the Commission is relevant and is entitled to appropriate respect. Except in exceptional cases, the permission hearing is not a rehearsal of the final trial. Where the dispute is amenable to meaningful mediation, and litigation may damage the charity’s finances or activities, the court may stay the claim to allow mediation before deciding whether permission should be granted.

The claimants sought permission to pursue charity proceedings concerning the governance and property of the At-Taqwa Trust. The proposed proceedings challenged the validity of the claimants’ removal as trustees and sought recovery of property said to have been transferred unlawfully. The Charity Commission had refused permission and had recommended mediation.

The first defendant did not contest the claim, and the Charity Commission took no active part. The second and third defendants supported a stay so that professional mediation could take place. The central issue was whether the court should grant permission immediately or defer that decision while the parties attempted mediation.

1. Outcome. The court declined to grant permission on the information then available and stayed the claim until 15 July 2020 so that the active parties could engage in mediation with a professional mediator.
2. Section 115(5) of the Charities Act 2011, together with CPR rule 64.6 and Practice Direction 64A paragraph 9, governed the application. The guidance in Rai v Charity Commissioners of England and Wales [2012] EWHC 1111 (Ch) was applied. The court was exercising its own, unfettered jurisdiction, rather than hearing an appeal from the Commission.
3. The permission hearing was not ordinarily to be treated as a rehearsal of the substantive proceedings. The proposed claim had to be legally sustainable, but that was not sufficient. The court had to ask whether commencing litigation was the best, or least bad, course in the interests of the charity as a whole.
4. The court was not satisfied that litigation was presently in the trust’s interests. The trust’s financial position was poor, its charitable activities were suspended, and continuing litigation was likely to cause further financial and operational harm. The parties were required to put the trust’s interests above their own and to engage fully in mediation, which ordinarily required give and take on both sides.
5. The court indicated that, if a further application became necessary, it would examine closely the extent to which each side had made genuine efforts to secure a successful mediation. Outstanding consequential matters were to be dealt with by written submissions.

First-instance decision. The judgment does not state any prior appellate decision.