The High Court has warned public bodies to exercise “great caution” in the context of disqualification proceedings and charity trustees, so not to deter able and experienced volunteers from becoming trustees.
Mrs Justice Falk made the comments in her judgment on the disqualification proceedings brought against the trustees of Kids Company, the well-known charity spearheaded by Camila Batmanghelidjh, which collapsed in 2015.
The Official Receiver sought varying periods of disqualification, between 2.5 and 6 years, on the basis of the trustees’ “collective failure” to properly manage the charity in the months leading to its collapse.
However, finding no fault on the part of the trustees and dismissing the case against them, Falk J clarified that there is no concept of collective responsibility as a basis for disqualification.
She said where the accusation is one of collective failure, the court must consider the extent of each individual director’s personal responsibility for that failure.
Many professionals from the private sector act as trustees; and among the Kids Company board of trustees was a former partner of Macfarlanes LLP, Jane Tyler.
Tyler, a retired antitrust specialist, chaired the Governance Committee, attended board and committee meetings, assisted in drafting and reviewing the charity’s internal procedures, arranged for pro bono support and legal advice and got involved in fundraising.
Falk J commended Tyler for her commitment, describing her as “careful and extremely conscientious” and praised the trustees for their role in supporting the charity. She said: “Most charities would, I think, be delighted to have available to them individuals with the abilities and experience that the trustees in this case possess.”
She drew attention to the fact that the charity sector depends on capable individuals with a range of different skills prepared to take on trusteeship roles.
She commented: “It is vital that the actions of public bodies do not have the effect of dissuading able and experienced individuals from becoming or remaining charity trustees”.
Falk J also warned that the prospect of “wide ranging but unclear allegations of incompetence” and disqualification proceedings could deter prospective trustees, particularly those involved in the management of businesses – and those trustees who practice in the regulated professions, for whom regulatory issues may arise.
Anna Lowe, a legal director at Shoosmiths and a trustee of a small charity, The Counselling and Family Centre in Altrincham, commented: "The role of trustees in our communities has never been more important and it is reassuring to see the courts supporting this view in their unwillingness to condemn the very able trustees in this case.
“Now is the time to be actively encouraging interested and skilled individuals to step into these often undervalued positions.”
Lowe said she has gained an "enormous" amount from acting as a trustee and would urge anyone contemplating the role to offer their help.