Wednesday 20 March 2019

UK: Supreme Court to hear appeal in charity governance case

Earlier this week the Supreme Court published its permision to appeal decisions for February: see here (pdf). Among the cases for which an appeal has been granted is Lehtimäki v The Children's Investment Fund Foundation (UK) & Ors [2018] EWCA Civ 1605, [2018] 3 WLR 1470, [2018] WLR(D) 423.

The decision considered important aspects of the governance of charities, in the context of a one charity - CIFF - that was a company limited by guarantee. The court held that CIFF's members owed a duty corresponding with that owed by members of charitable incorporated organisations under section 220 of the Charities Act 2011: to exercise their powers in the way that they decide, in good faith, would be most likely to further the purposes of the organisation. The court also held that its inherent jurisdiction in relation to charities did not permit it to order a member of CIFF to exercise his powers in a particular way where there was no breach of duty. As the court put it: "Important though its role in relation to charities is, the Court is not entitled, absent a breach of duty, to substitute its view for that of the fiduciary" (para. [62]).

The court therefore concluded that the Chancellor, Sir Geoffrey Vos, had been wrong, at first instance ([2017] EWHC 1379 (Ch)), to order one of CIFF's members to vote to approve a resolution under section 217 of the Companies Act 2006 in the absence of clear evidence of breach of fiduciary duty by that member.

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