The advocacy group Cage has done the charity sector a service

The judicial review it has obtained of recent Charity Commission actions is an opportunity to settle crucial questions about the powers of the regulator, says Stephen Cook

Cage describes itself as an advocacy organization that tries to ensure that the rule of law is followed in the cases of people accused of terrorist offences. It has attracted controversy over its interventions for detainees in Guantanamo Bay and, most recently, for its statements about Mohammed Emwazi, the man nicknamed Jihadi John who is believed to have beheaded several Western hostages in Syria. In February this year, a Cage representative suggested that Emwazi had been radicalized by his contact with the British security services. This resulted in widespread condemnation by politicians and in the media.

Cage is not a charity, but it has done the charity sector an important service by applying for and, earlier this month, obtaining leave for a judicial review of the actions of the Charity Commission following the Emwazi episode. The case will be heard by at least two judges in the Divisional Court, probably in the autumn, and its outcome could well have important implications for relations between charities and the commission in the future.

At its heart lie two questions: when is robustly expressed advice and guidance from the commission to a charity tantamount to an order? And if such advice and guidance is tantamount to an order, what powers, in what circumstances, does the commission actually have to issue such an order? The answers will have a direct bearing on the crucial question of who is ultimately in charge of any charity – the trustees or the commission.

The case revolves around the grants made to Cage in the past by the Joseph Rowntree Charitable Trust, the Quaker foundation with charitable objects that include supporting people who address the root causes of conflict and injustice. After Cage’s statements about Emwazi, the commission contacted the JRCT (among other charities) and asked for assurances that it would not fund Cage either now or in the future. JRCT ended up giving those assurances only under what it called "intense regulatory pressure."

Cage contends that the commission was in effect issuing an order that it did not have the legal authority to issue, and was therefore acting beyond its powers. The JRCT has become an interested party in the case and has submitted a skeleton argument to the court in which it says that the commission’s action cannot be fairly seen as advisory only: "It was characterized at the time as a mandatory requirement to comply with the Charity Commission’s view of their fiduciary duties." It concludes that the commission "cannot lawfully require trustees to fetter their future exercise of fiduciary discretion as to what may be in a charity’s best interests in the light of future developments."

In its "summary grounds of resistance" to Cage’s application, the Charity Commission interprets events differently. None of the letters sent to the JRCT about Cage "was anything other than advice or guidance," it says. "They were not issued under the defendant’s statutory enforcement powers, not did they purport to be. The charities were thus at liberty not to comply with them." It also argues that the phrase "intense regulatory pressure", used by JRCT, "itself connotes an understanding that JRCT could in principle have decided not to rule out funding the claimant." These and other semantic and legal conundrums will form the subject of the court’s deliberations in due course, and the outcome is likely to set an important precedent for the scope of the commission’s powers.

It is interesting to speculate what might have happened, especially in the media, if JRCT had indeed defied the commission. In the event, the charity took the pragmatic, damage-limiting decision to comply, and if Cage had not decided to seek a judicial review of the commission’s actions, that would probably have been an end to the matter, leaving everyone in a state of uncertainty. It is dismaying that no-one in the charity sector saw fit to take the initiative in challenging the commission over a matter that raises questions about not only the fundamental question of the discretion of trustees but also the rule of law and the potential abuse of executive power. The commission is on a roll with the robust approach to regulation it has adopted in recent times. Rather than kow-tow, charities should, in appropriate cases such as this, be prepared to push back.



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