Bhamani v Suttar Article

Bhamani v Suttar Article

Introduction

On 26 February 2021, the Court of Appeal handed down its judgment in the case of Bhamani -v- Sattar [2021] EWCA Civ 243. The case concerned a Masjid in Brent (a place of worship and community centre) and the inappropriate use of charity trustee powers by the appellants in barring the respondents from attending the Masjid. However, one of the most significant points to arise from the judgment is the discussion about what constitutes charity proceedings.

Case Summary

The appellants, who were members of the management committee and charity trustees of a Masjid, sought  summary judgment in respect of their injunction application, which would prevent a number of worshippers from entering the charity’s premises (the respondents). The respondents had neither pleaded their proposed defence nor applied to amend a defence.

The application for summary judgment in respect of the injunction was dismissed, the Court deciding that the respondents, as worshippers at the Masjid, had a direct and personal interest in ensuring that the charity was being properly run by the management committee. The appellants were held to have misused their powers as charity trustees in preventing the respondents from attending prayers and as such depriving them of the benefits the charity was intended to provide.

Charity Proceedings

Charity proceedings are those proceedings described in s115(8) of the Charities Act 2011 and generally relate to the exercise of the administrative powers of trustees.

The Court of Appeal dismissed the appellants’ argument that the respondents’ proposed defence amounted to charity proceedings, for which Charity Commission authorisation or court permission had not been sought (under s115(8) of the Charities Act 2011). The appellants argued that if the respondents were allowed to raise their proposed defence, then it would raise questions in relation to ‘the administration of a trust for charitable purposes’ within the meaning of s115(8)(b) of the Charities Act and would therefore constitute ‘charity proceedings’.

When the appellants issued their claim, the proceedings were not charity proceedings, as charity proceedings only relate to the internal administration or domestic affairs of a charity. The initial claim was for an injunction to prevent access to the property. It was acknowledged by the Court of Appeal that an action can change from not being charity proceedings to being charity proceedings if, for example, the respondents had brought a counterclaim against the applicants alleging  that the members of the managing committee had mismanaged the affairs of the charity to the extent that they were not fit to be charity trustees. This would likely be considered as charity proceedings.  

The Court of Appeal also considered the purpose of the restrictions on charity litigation. The purpose of requiring authorisation for charity proceedings is to prevent charities from spending money that is subject to charitable trusts on litigation relating to internal disputes and ill-founded claims relating to the administration of the charity. Furthermore, legal action can present significant reputational risks to a charity.

Conclusion

The Court distinguished between bringing proceedings (including a counterclaim) and pleading a defence.

It was held that the pleading of a defence, could not, itself, amount to bringing or taking charity proceedings. The purpose of the Charities Act restrictions (preventing unnecessary expenditure of charity funds on resolving internal administrative disputes) would not apply to a defendant who is sued and seeks to defend himself by alleging that charity trustees are abusing their powers.

The Court commented that bringing proceedings is a voluntary act, whereas being sued is not, and it is unlikely the legislation intended for any party being sued to request permission from the Charity Commission to defend themselves.

It remains the case that bringing a counterclaim may fall within the definition of charity proceedings and require the prior authorisation of the Charity Commission or the court.