Draft Protection of Charities Bill - Joint Committee on the Draft Protection of Charities Bill Contents


Appendix 4: Human Rights Memorandum


Letter from the Chairman to Dr Hywel Francis MP, 16 December 2014

The pre-legislative Joint Committee on the Draft Protection of Charities Bill has received from the Cabinet Office the enclosed draft Human Rights Memorandum. The draft Memorandum offers the Cabinet Office's view on the provisions in the draft Bill which it considers engage human rights considerations.

The Joint Committee considered the draft Memorandum at its meeting on 16 December and agreed that the views of the Joint Committee on Human Rights would be most valuable and should be sought. Accordingly I am writing to you to request that your Committee consider the memorandum with a view to giving the Joint Committee advice on the provisions covered in the memorandum as well as to make any other comments which your Committee feels are relevant to our scrutiny of the draft Bill.

The time available for our scrutiny is short, and I would be most grateful if the Committee was able to offer a view before we see the responsible Minister on 13 January.

I am copying this letter to the JCHR clerk, Michael Hennessy, and to the Lords clerk of the Joint Committee on the draft Bill, Duncan Sagar.

Human Rights Memorandum

Introduction

1) This Memorandum was prepared by the Cabinet Office for the Joint Committee on the Draft Protection of Charities Bill ('the Bill') to assist with its scrutiny of the Bill. The Memorandum identifies human rights considerations arising from the Bill.

2) The Bill affects charities, charity trustees and trustees for a charity. A charity can be an incorporated or unincorporated body. A trustee can be an individual or an incorporated body. This Memorandum considers the rights of both charities and charity trustees because certain Convention rights are exercisable by both individuals and incorporated bodies[328].

Clause 1 (Official warnings by the Commission)

3) Clause 1 confers on the Charity Commission (the Commission) a new power to issue a warning to a charity or charity trustee in connection with the Commission's second and third general functions[329].

4) Article 8 (right to respect for private and family life) is potentially engaged where an official warning names an individual trustee, officer, agent or employee and is published as this could have an adverse effect on that person's reputation. The Cabinet Office considers that any interference is justified because it is prescribed by law and is for a legitimate aim, namely the protection of the rights and freedoms of others because it is seeking to protect charity assets which are held for the benefit of third party beneficiaries. The Cabinet Office considers that the interference is proportionate because being named in an official warning is a low level interference with a person's private life which is outweighed by the protection to charity assets which it offers.

Clause 2 (investigations and power to suspend)

5) Under section 76(3), the Commission may suspend a trustee, officer, agent or employee from a charity for up to 12 months, where it has instituted an inquiry under section 46 and the Commission is satisfied that there has been misconduct or mismanagement or it should act to protect the charity's property or secure a proper application of the charity's property. Clause 2 extends the period for suspension so that the Commission can suspend a person for up to 2 years.

6) Article 6(1) (right to a fair trial) is engaged, in relation to the suspension of a paid trustee, because an extension to a trustee's suspension temporarily deprives him of his right to act as a paid trustee. Acting as such is a professional activity of a private nature since it comprises a relationship between the trustee and the charity, making the right to act as a paid trustee a civil right[330] for the purposes of Article 6(1). In the Cabinet Office's view, the rights guaranteed by Article 6(1) are satisfied here because a suspension order can be appealed to the First-tier Tribunal (General Regulatory Chamber), making the suspension an Article 6 compliant decision making process overall.

7) Article 8 is engaged and interfered with because the Commission may only suspend a person where it is satisfied that there has been misconduct or mismanagement or a charity's property is at risk, so extending a suspension could have an adverse effect on that person's reputation. In the Cabinet Office's view, the interference with Article 8 rights is justified under Article 8(2) because it is prescribed by law and is for a legitimate aim, namely the protection of the rights and freedoms of others, because it is seeking to protect charity assets which are held for the benefit of third party beneficiaries. In addition, it might be argued that suspension is necessary for the prevention of crime because it may prevent a criminal offence being committed, for example, fraudulent use of charity funds. The Cabinet Office considers the interference with Article 8 is proportionate because protection of charity assets, where there is suspected misconduct or mismanagement or a charity's property is at risk, outweighs the potential damage to a person's reputation that arises from being suspended.

8) Article 1, Protocol 1 (protection of property) is potentially engaged and interfered because, although the vast majority of trustees act as volunteers, some trustees do hold paid positions and suspension could be argued to affect a trustee's ability to earn a living. Article 1 Protocol 1 permits interference with property where it is in the public interest and where that interference is proportionate to that legitimate aim. In the Cabinet Office's view, any interference with Article 1 Protocol 1 rights is justified because suspension is a temporary measure intended to protect charity assets, which are held for the benefit of third party beneficiaries, where there is a threat to those assets. It ensures that the risk of misconduct or mismanagement in a charity is tackled and any charitable assets are used for the charitable purposes for which those assets are held.

Clause 4 (power to remove charity trustees following an inquiry)

9) Under section 79, if the Commission has opened an inquiry into a charity under section 46, it may establish a scheme for the administration of the charity where (i) it is satisfied there has been misconduct or mismanagement and (ii) it is necessary or desirable to act to protect charity property or secure a proper application of charity assets. Clause 4(2) amends this provision so that the Commission may establish an administration scheme if (i) or (ii) are satisfied, ie a lower threshold.

10) Article 1, Protocol 1 is engaged because a scheme for the administration of a charity sets new terms on which a charity must be run and this could result in a charity's funds or assets being applied differently by trustees. In the Cabinet Office's view, the proposed change can be considered in the public interest and proportionate because a scheme for the administration of a charity is seeking to protect charity assets which are held for the benefit of third party beneficiaries, where they are under threat because either there has been misconduct or mismanagement or it is necessary or desirable to act to protect charity property or secure a proper application of charity assets.

Clause 5 (power to remove disqualified trustees)

11) Clause 5(2) confers on the Commission a new power to remove a disqualified trustee by order.

12) Article 6(1) is engaged because removal of a disqualified trustee prevents a person from remaining on the board of a charity and this is a right of a private nature, making it a civil right. The Cabinet Office's view is that there is no interference with Article 6 rights because (i) the Commission can only remove a trustee who is disqualified and disqualification can be appealed to the First-tier Tribunal (General Regulatory Chamber) and (ii) removal itself can be challenged by judicial review, which provides a sufficient review process, making it an Article 6 compliant decision making process overall.

13) Article 8 is engaged due to the potential effect upon an individual of being removed as a trustee—a disqualified trustee who is removed by the Commission is put on a register under section 182 and this could have an adverse effect on the trustee's reputation. In the Cabinet Office's view, the interference with Article 8 is justified under Article 8(2) because it is prescribed by law and is for a legitimate aim, namely the protection of the rights and freedoms of others, because it is seeking to protect charity assets which are held for the benefit of third party beneficiaries. The Cabinet Office considers that the interference is proportionate. The Commission can only remove a trustee who has already been disqualified and disqualification will have already had an adverse effect on their reputation. Any further adverse effect on a trustee's reputation arising from removal is outweighed by the protection to charity assets which removal offers.

14) Article 1, Protocol 1 is potentially engaged and interfered because, although the vast majority of trustees act as volunteers, some trustees do hold paid positions and removal could be argued to affect a paid trustee's ability to earn a living. In the Cabinet Office's view, the proposed change can be considered in the public interest and proportionate because removal is intended to protect charity assets, which are held for the benefit of third party beneficiaries, where there is a threat to those assets. It ensures that a disqualified trustee, who might pose a threat to those assets, can no longer remain on the charity's books as a trustee.

Clause 6 (power to direct winding up)

15) Clause 6(2) confers on the Commission a new power to make an order directing the trustees to wind up a charity where the conditions in section 84(1) are met and it is satisfied that the charity does not operate or its purposes can be promoted more effectively if it ceases to operate, and exercising the power would be likely to help increase public trust and confidence in charities.

16) Article 6(1) is engaged because an order directing the trustees to wind up a charity could effectively stop the charity from operating, which is a civil right. In the Cabinet Office's view, Article 6(1) is satisfied here because an order directing winding up can be appealed to the First-tier Tribunal (General Regulatory Chamber), making it an Article 6 compliant decision making process overall.

17) Article 1 Protocol 1 is engaged because an order directing the trustees to wind up a charity will result in the disposal of the charity's property. In the Cabinet Office's view, the proposed change can be considered in the public interest and proportionate because it protects charity assets, which are held for the benefit of third party beneficiaries, from being kept in a charity which is not operating or not operating properly. An order transferring the charity's property to another charity would ensure the proper application of charity property for the charitable purposes on which it is held. More generally, the new power will improve the overall regulation of charities and public confidence in charities, because the Commission can only exercise the power where it would help increase public trust and confidence in charities.

Clause 7 (power to direct property to be applied to another charity)

18) Under section 85, where a person controls property on trust for a charity but is unwilling to apply it properly, the Commission may make an order directing the person how to apply the property. Clause 7 extends section 85 so that it also applies to people who are unable to apply charity property properly (eg banks who act on client instruction).

19) Article 6(1) is engaged because the provision enables the Commission to make an order which could have a significant effect on the way a charity operates, which is a civil right. In the Cabinet Office's view, Article 6(1) is satisfied here because an order can be appealed to the First-tier Tribunal (General Regulatory Chamber), making it an Article 6 compliant decision making process overall.

20) Article 1 Protocol 1 is engaged because the Commission order will direct how charity property should be applied. In the Cabinet Office's view, the proposed change can be considered in the public interest and proportionate because the interference ensures that charity assets, which are held for the benefit of third party beneficiaries, can be applied properly.

Clauses 8 (automatic disqualification of charity trustees) and 9 (power to disqualify from being a charity trustee or trustee of a charity)

21) Section 178 has grounds on which a trustee can be automatically disqualified, including a conviction for an offence involving dishonesty or deception. Clause 8 amends section 178 to add new grounds for automatic disqualification. Under section 181, a person who is automatically disqualified can apply to the Commission for a waiver of the disqualification.

22) Clause 9 confers on the Commission a new power to disqualify a person from being a charity trustee for up to 15 years (and an interim power to suspend a person) if the person is unfit to be a charity trustee and one or more of the specified conditions is met.

23) Article 6(1) is engaged, in the case of a paid trustee, because a trustee's disqualification or suspension prevents a person from earning their livelihood as a trustee, which is a civil right as explained in paragraph 6 of this Memorandum. In the Cabinet Office's view, Article 6(1) is satisfied because a Commission refusal to grant a waiver for a person who is disqualified automatically and disqualification orders (and suspension orders pending a disqualification order, including review of those orders) can be appealed to the First-tier Tribunal (General Regulatory Chamber), making it an Article 6 compliant decision making process overall.

24) Consideration has been given as to whether Article 7 (no punishment without law) is engaged because an unspent conviction for the offences specified in new section 178A (inserted by clause 8(6)) will trigger disqualification whether the conviction occurred before or after commencement of this legislation—see section 179(1)(a), as amended by clause 8(7), and new section 181A(7). The Cabinet Office considers that Article 7 is not engaged because disqualification does not amount to a criminal penalty—it is designed with preventive but not punitive aims[331]. Disqualification is designed to protect charities from being run by people unfit to do so and to protect charity property from the risk of misapplication. This is demonstrated by the other grounds for disqualification, which include insolvency arrangements and company director disqualification orders. So, a person can be disqualified from being a trustee for reasons aside from a criminal conviction. It forms part of the wider regulatory framework for charities.

25) Article 8 (right to respect for private and family life) is engaged due to the potential effect upon an individual of being disqualified—a disqualified trustee is put on a register under section 182 and this could have an adverse effect on the trustee's reputation, given the grounds for disqualification (a person is unfit and meets at least one specified condition). In the Cabinet Office's view, the interference is justified under Article 8(2) because it is prescribed by law and is for a legitimate aim, namely the protection of the rights and freedoms of others, because it is seeking to protect charity assets which are held for the benefit of third party beneficiaries. The Cabinet Office considers that the interference is proportionate because the risk to a person's reputation from disqualification is outweighed by the protections which it offers to charity assets.

26) Article 1 Protocol 1 (protection of property) is engaged. Although the vast majority of trustees act as volunteers, some trustees do hold paid positions and disqualification could affect a trustee's ability to earn a living. In the Cabinet Office's view, any interference is justified. The Commission is the regulator of charities and this proposed change can be considered in the public interest and proportionate as (i) it protects charities from being run by people unfit to run them and the consequential risk of misapplication of charity property and, more generally (ii) it will improve the overall regulation of charities and public confidence in charities.

Cabinet Office

17 November 2014

Letter from Dr Hywel Francis MP to the Chairman, 7 January 2015

Thank you for your letter of 16 December asking for my Committee's views on the Cabinet Office's draft Human Rights Memorandum on the Draft Protection of Charities Bill.

I am afraid that in the time available we have not been able to give the draft Bill or the draft Memorandum very detailed consideration, but, having taken advice, there is one significant human rights issue raised by the draft Bill, but not dealt with in the draft Memorandum, on which we would comment: the lack of legal certainty in a number of key provisions which confer broad and coercive powers on the Charity Commission. To give just four examples:

·  The range of conduct which can be considered by the Commission when exercising its powers to investigate and suspend a trustee is broadened by clause 3 of the draft Bill to include "any other conduct … that appears to the Commission to be damaging or likely to be damaging to public trust and confidence in charities generally or particular charities or classes of charity."

·  The Commission's power to direct the winding up of a charity, in new s. 84A of the Charities Act 2011 inserted by clause 6 of the draft Bill, is exercisable where the Commission is satisfied that winding up "is likely to help to increase public trust and confidence in charities."

·  The Commission has the power to disqualify a person from being a trustee, under new s. 181A of the Charities Act 2011 inserted by clause 9 of the Bill, if it is satisfied that "any other past or continuing conduct by the person, whether or not in relation to a charity, is damaging or likely to be damaging to public trust and confidence in charities generally or in the charities or classes of charity specified or described in the order."

·  Various of the Commission's extended powers are exercisable if the Commission is satisfied not only that a person has been responsible for misconduct or mismanagement, or that their conduct contributed to it or facilitated it, but that the person was "privy to" the misconduct or mismanagement.

In the absence of further definition in the Bill itself, or other guidance, such broad and vague language significantly increases the power of the Commission and provides insufficient certainty to both individual trustees and charities about the possible consequences of their conduct in relation to matters which may have nothing to do with the management or administration of a charity.

This lack of legal certainty matters from a human rights perspective because of the potential impact of the Commission's extensive powers on a variety of rights. The rights affected include not only the right to respect for private and family life (including reputation) of trustees in Article 8 ECHR, as the draft Memorandum acknowledges, but the rights to freedom of expression and association of both trustees and charities themselves in Articles 10 and 11 ECHR, and the property rights of charities under Article 1 Protocol 1 ECHR.

The lack of legal certainty in the draft Bill is particularly concerning in light of the context in which the draft Bill was announced by the Prime Minister: a meeting of the Government's Extremism Taskforce, as part of the Government's counter-extremism strategy. The Government's Prevent strategy, published in 2011 as part of its overall counter-terrorism strategy, defines "extremism" so as to include non-violent as well as violent extremism: "vocal or active opposition to fundamental British values, including democracy, the rule of law, individual liberty and mutual respect and tolerance of different faiths and beliefs" constitutes extremism.

We have recently considered this definition of extremism in the context of the new "Prevent" duty in the Counter-Terrorism and Security Bill. There, we had concerns about the potentially inhibiting effect of the vague definition of extremism on freedom of expression and academic debate in universities. We would have similar concerns about the lack of legal certainty, and the consequent chilling effect on the rights of both trustees and charities themselves, if the Charity Commission's new extended powers were intended to be used in relation to conduct measured against the same vague definition of "extremism".

In the course of our work on the human rights compatibility of counter-terrorism legislation we have also had reason to write to HM Treasury to express concern about the chilling effect of terrorist asset-freezing legislation on the operation of bona fide charities, because banks are reluctant to take the commercial risk of providing services to charities with alleged links to "extremism". International aid charities are already finding it increasingly difficult to deliver legitimate humanitarian aid in conflict zones such as Syria and Gaza as a result of this chilling effect of counter-terrorism legislation. To the extent that the evidence shows that some trustees and charities have abused their position to channel funds to terrorist causes, stronger powers for the Charity Commission may be warranted, but if those new, extended powers are too vaguely worded, it will only exacerbate the already inhibiting effect of counter-terrorism legislation on the work of legitimate charities.


328   Article 1, Protocol 1 refers specifically to legal and natural persons. In OAO Neftyanaya Kompaniya YUKOS v Russia (App. No. 14902/04) (2011) ECHR 14902/04, the European Court of Human Rights found there was a breach of the applicant oil company's article 6 rights. Back

329   These are in section 15. The Commission's second general function is: encouraging and facilitating the better administration of charities. The Commission's third general function is: identifying and investigating apparent misconduct or mismanagement in the administration of charities and taking remedial or protective action in connection with misconduct or mismanagement in the administration of charities. Back

330   Le Compte, Van Leuven and De Meyere v Belgium (1981) 4 EHRR Back

331   In Ibbotson v UK [1999] Crim LR 153, the registration requirements of section1(3) of the Sex Offenders Act 1997, which have partially retrospective operation, did not constitute a penalty for the purposes of article 7 since they were preventative rather than punitive in character. In R. V Field; R. V Young [2002] EWCA Crim 2913, a disqualification order under section 28 of the Criminal Justice and Court Services Act 2000 preventing a defendant working with children for an indefinite period, in respect of offences occurring before the commencement of section 28, did not constitute a penalty under article 7. In this case, conviction was not a pre-condition to making a section 28 order. Back


 
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