Avtar Singh Atwal & Anor v The Charity Commission For England And Wales

On a renewed application under section 115(5) of the Charities Act 2011, the High Court exercises an original discretion. The court must consider whether there is a legally sustainable claim brought in good faith and whether litigation is the least unsatisfactory course for the charity as a whole.

The Charity Commission’s refusal of permission is entitled to respect because of its regulatory expertise, but the decisive question is whether the Commission will actually use its statutory powers. Where there is insufficient confidence that it will act promptly, the court may grant permission even though the Commission has power to address the dispute. Permission may be granted subject to a stay, allowing regulatory action and mediation to take place.

The claimants, members and former management committee members of an unregistered Sikh gurdwara, sought permission to bring charity proceedings against its trustees after the Charity Commission refused consent under section 115 of the Charities Act 2011.

The proposed proceedings concerned the gurdwara’s charitable status, its governing constitutional documents, the removal and replacement of trustees, registration, and accounts and enquiries. The Commission argued that it could deal with most matters through its statutory powers and that further mediation should occur.

The central issue was whether court proceedings were the least unsatisfactory course, having regard to the charity’s interests, in circumstances where the Commission had not acted and would act only if permission were refused.

1. Permission granted. The claim was legally sustainable, had a reasonable prospect of success, and was brought in good faith. The claimants’ concerns about the trustees, non-registration, disputed governing documents and possible misuse of charitable resources were sufficiently serious to justify consideration by the court.
2. The court exercised an original jurisdiction under section 115(5) of the Charities Act 2011, rather than reviewing the Commission’s decision on appeal. The Commission’s refusal was relevant evidence and entitled to respect because of its expertise, but it was not determinative.
3. The statutory powers available to the Commission, including investigation, directions, suspension or removal of trustees and appointment of an interim manager, were highly relevant under section 115(3). The practical question was whether those powers would actually be used. The Commission’s previous inaction, including its failure to secure registration, meant that the court lacked sufficient confidence that it would act urgently if permission were refused.
4. Although litigation risked expense and diversion of charitable resources, refusing permission would leave the claimants in limbo while limitation continued to run. Court proceedings were therefore the least unsatisfactory course.
5. Permission was granted subject to a stay. The stay was intended to allow the Commission to investigate and act, and to permit further mediation in accordance with the principles in Churchill v Merthyr Tydfil [2023] EWCA Civ 141. The stay could be returned to court for variation or removal if it operated unfairly or ceased to serve its purpose.

The Charity Commission refused consent to commence charity proceedings on 1 February 2024. The High Court, exercising its original jurisdiction under section 115(5) of the Charities Act 2011, granted permission subject to a stay.