Council takes east London arts charity to High Court over £850k repayment dispute

The Rich Mix Cultural Foundation says it was not clear whether the money provided by Tower Hamlets Council was a grant or a loan

Rich Mix Cultural Foundation
Rich Mix Cultural Foundation

A charitable arts venue in east London is being taken to the High Court by the local council in a dispute over the repayment of £850,000 in funding.

The Rich Mix Cultural Foundation, which registered with the Charity Commission in 2001, operates an arts venue and performance space in Shoreditch. It had an income of £2.7m in the year to 31 March 2014, down from a little more than £3m the year before.

Jane Earl, chief executive of the charity, told Third Sector that in 2003, before she joined, Tower Hamlets Council provided £850,000 to the charity after the costs of a renovation project went over budget.

But she said it was not clear under what terms this money was given, including whether it was a grant or a loan. "It’s clear that there was a draft loan agreement drawn up by the council, but it was never signed by anyone at Rich Mix," she said.

The council has since asked Rich Mix to pay back the money, plus interest. This totalled a little over £1m when the council first asked for payment in 2012, serving a High Court claim on the charity that summer.

Earl said the charity and the council would exchange witness statements at a preliminary hearing in the Queen’s bench division of the High Court on 29 May, and that a full three-day hearing was scheduled to begin on 3 July.

She said the charity had made two repayment offers to the council and they had been on the table for six months. The first offer is that it would pay the money back in annual instalments of £30,000 from its surpluses.

The second involves £1.5m paid to the council by a property developer in 2008 in respect of a nearby property, which the charity argues was earmarked for the charity.

A spokesman for the council said that Rich Mix had also made a legal claim to obtain this £1.5m, but this had failed.

He said the council "remains open to discussion regarding future funding arrangements and remains in constructive dialogue with Rich Mix management".

More than 12,000 people have signed a petition on the website, started by Rich Mix, asking the council to drop the High Court case.

Earl said that the charity had planned to present this at a previous council meeting, but had been unable to do so because the council only accepted three petitions per meeting. She said she was not sure when the charity would next have a chance to do so, because no meetings were scheduled until after the election of a new mayor.

The new election has been scheduled for 11 June. The former mayor Lutfur Rahman was removed from office last month after he was found guilty of using grants to the voluntary sector as bribes to gain electoral support.

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