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


Appendix 5: The Charity Tribunal


Letter from the Chairman to the Lord Chief Justice, 7 January 2015

As you will recall, I wrote to you on 17 December with an initial set of questions relating to the Draft Protection of Charities Bill, currently being examined by the Joint Committee which I chair.

As invited by my letter, your office has since helpfully been in contact with the Committee's secretariat over the substance of the proposed questions. Following the discussions at official level, I would now be grateful for a written response to the following questions, which I hope will be straightforward to answer. These questions supersede those in my earlier letter.

1) Please explain the Tribunal's role in the regulation of the charities sector.

2) Has the Commission or the Attorney General ever made a reference to the Tribunal under section 325 or 326 of the Charities Act 2011?

3) How long do appeals to the Tribunal take from the point of application to getting a result?

4) It has been suggested to the Committee that Schedule 6 to the 2011 Act should be removed and that the following should be provided:

a)  a right of appeal on a point of law against a decision of the Commission; and

b)  a right to seek a review of the Commission's decisions.

From a practical perspective and with regard to the functioning of the Tribunal, what would be the advantages and disadvantages of such an approach?

5) From a practical perspective and with regard to the functioning of the Tribunal, will the new powers for the Commission which are included in the Bill require any amendment to Schedule 6 (beyond the specific amendments made on the face of the Bill) to provide powers of review or appeal to the Tribunal?

Letter from Judge McKenna to the Chairman, 19 January 2015

I am writing in response to your request to the Lord Chief Justice for evidence about the Charity Tribunal for the Joint Committee on the Draft Protection of Charities Bill.

I am the Principal Judge of the First-tier Tribunal (Charity). As such, I take the lead on jurisdictional matters relating to charity appeals. The charity jurisdiction sits within the General Regulatory Chamber of the First-tier Tribunal, under the judicial leadership of Chamber President, Judge Peter Lane[332]. The General Regulatory Chamber is part of the Tribunal system created by the Tribunals Courts and Enforcement Act 2007 ("TCEA") and comes under the overall judicial leadership of the Senior President of Tribunals, Sir Jeremy Sullivan.

I am also a Judge of the Upper Tribunal (Tax and Chancery Chamber) which hears appeals from the First-tier Tribunal on charity matters. As there are four other judges "ticketed" to hear charity appeals in the First-tier Tribunal, it is sometimes the case that I do not sit on a charity appeal at first-instance but subsequently hear it on appeal in the Upper Tribunal. The President of the Upper Tribunal (Tax and Chancery Chamber) is Sir Nicholas Warren.

In an Upper Tribunal hearing, I sit alongside a High Court Judge (Chancery Division). In the First-tier, I sit with one or two lay members, who are persons appointed for their experience and expertise in relation to charities. We were all appointed by the Lord Chancellor following an open competition run by the Judicial Appointments Commission.

I attach a diagram[333] showing the charity jurisdiction's place within the overall tribunal system, which I hope is helpful to the Committee. (You will note that I also have another role in the system, as the Chamber President of the War Pensions and Armed Forces Compensation Chamber).

I have provided my evidence below on the five questions sent to me and I hope I have answered them fully. The Committee should feel free to ask me for clarification if anything is unclear. Any views expressed in this letter are, of course, my own, and are not made on behalf of the First-tier Tribunal or the Upper Tribunal.

1) Please explain the Tribunal's role in the regulation of the charities sector

1.1)  The Charity Tribunal originally created by the Charities Act 2006 was established to hear appeals from decisions of the Charity Commission. Such cases had previously been heard in the Chancery Division of the High Court and the transfer of those cases to a specialist tribunal was intended to increase access to justice for charities and to stimulate the development of charity law. The Charity Tribunal became operational in 2008 but was fundamentally reformed in 2009 by its integration into the unified tribunals framework established by the Tribunals, Courts and Enforcement Act 2007 (TCEA).

1.2)  Following the enactment of the consolidating Charities Act 2011, the Tribunal's jurisdiction is now found at section 315 and Schedule 6 to that Act. In summary, there are three distinct types of case which may be heard by the Tribunal: appeals, reviews and references. The Tribunal's procedural rules are made by the Tribunal Procedure Committee, a body established under s. 22 TCEA.

Appeals

1.3)  Cases proceed an as appeal unless they are listed in section 322 of the 2011 Act as a "reviewable" decision. Appeals are de novo proceedings, so that the Tribunal, in effect, steps into the Charity Commission's shoes and re-takes the decision under appeal.

1.4)  The majority of the Tribunal's cases so far have been appeals. An example of a common type of appeal case is one brought against the refusal by the Charity Commission to register an institution as a charity. As mentioned above, the jurisdiction in such cases is de novo, so the Appellant effectively makes a fresh registration application to the Tribunal.

Reviews

1.5)  Reviewable matters require the Tribunal to "apply the principles which would be applied by the High Court on an application for judicial review" (section 321(4)), and so involve a form of relief carrying the power to set aside a decision and remit the matter to the Charity Commission to re-take it in accordance with any findings made or direction given by the Tribunal.

1.6)  The most common type of review application heard so far has involved the Charity Commission's decision to open a statutory inquiry into a charity.

Standing to bring a Case to the Tribunal

1.7)  Schedule 6 to the 2011 Act contains a table which sets out in column one which decisions of the Charity Commission can be appealed or reviewed, in column two who can apply to the Tribunal in respect of each type of decision, and in column three what powers are exercisable by the Tribunal if an appeal in respect of that type of decision is upheld. There are fifty or so decisions currently listed in column one[334]. The content of columns two and three varies for each entry in column one, so the recipient of a decision made by the Charity Commission needs to know the legal provenance of the power exercised in making that decision in order to find it in the table and, reading across, to know whether they have standing to bring an appeal under column 2, and what order the Tribunal can make under column 3 if they are successful.

1.8)  The category of persons listed in column 2 of Schedule 6 and so who have standing to make an application to the Tribunal is extremely wide, generally being those persons who "are or may be affected" by the Charity Commission's decision. The right to make an application is not, therefore, always confined to the charity which is the subject of the Charity Commission's decision, but often includes third parties who disagree with it. For example, where the Charity Commission makes a decision in relation to a recreation ground charity, members of the public who live nearby and use the recreation ground have brought an appeal to the Tribunal.

1.9)  It is not necessary for a charity to exhaust the Charity Commission's internal review process prior to applying to the Tribunal. The making of an appealable or reviewable decision by the Commission gives rise to a statutory right of appeal. Indeed in many cases, if a charity wished to appeal through the Charity Commission's internal system, they would be out of time to make an application to the Tribunal unless the Charity Commission made a fresh appealable decision on review.

References

1.10)  "References" are matters referred to the Tribunal by the Attorney General (or, with his consent, the Charity Commission) under section 326 of the 2011 Act to clarify matters of "charity law", as defined in section 331. This is a novel procedure, designed to settle questions of general importance to the charity sector without the need for individual charities to litigate them. This jurisdiction is declaratory (perhaps most closely analogous to an "advisory opinion" in judicial review proceedings) in which the Tribunal is asked to answer questions about a hypothetical charity but in which actual charities likely to be affected by the Tribunal's decision can apply to be joined as parties. Reference proceedings are non-adversarial so there is no winner or loser—the Tribunal merely answers the questions put to it and has no power to direct any particular outcome. The question of whether the Tribunal should have powers exercisable on the determination of a Reference is currently being considered by the Law Commission in its review of charity law.

Onward Appeals

1.11)  As mentioned above, appeals from the First-tier Tribunal (Charity) are to the Upper Tribunal (Tax and Chancery Chamber). The Upper Tribunal was established as a Superior Court of Record under TCEA s 3(5). Decisions of the Upper Tribunal have the same authority as those of the High Court[335] and onward appeal lies, on a point of law and with permission, to the Court of Appeal.

1.12)  First-tier Tribunal decisions turn on their own facts and have no precedent value. Upper Tribunal decisions create legal precedent and are thus binding on the First-tier and the executive.

1.13)  Applications for judicial review of decisions of the Charity Commission may now be transferred from the Administrative Court to the Upper Tribunal (Tax and Chancery Chamber) by virtue of s 31A of the Senior Courts Act 1981. As an example, in the first reference made by the Attorney General and heard in the Upper Tribunal (concerning the charitable status of independent schools) a simultaneous judicial review application raising similar issues was transferred from the Administrative Court to the Upper Tribunal so that the two cases could be heard together.

2) Has the Commission or the Attorney General ever made a reference to the Tribunal under s.325 or 326 of the Charities Act 2011?

2.1)  The Upper Tribunal (Tax and Chancery Chamber) has determined two References, both made by HM Attorney General. They are reported at [2011] UKUT 421 (TCC) and [2012] UKUT 420 (TCC) respectively. Both decisions are available to read via the Upper Tribunal's website[336].

2.2)  In the first Reference case, the Attorney General referred to the Tribunal a number of questions about the public benefit requirement for a hypothetical independent school. As noted above, the Independent Schools Council had sought judicial review of the Charity Commission's guidance in relation to the public benefit test under the Charities Act 2006. The ISC's judicial review application was transferred from the Administrative Court to the Upper Tribunal and joined with the Attorney General's Reference so that the two cases could be heard together. The Tribunal's decision determined the Reference and gave judgment on the judicial review application. The Charity Commission withdrew parts of its public benefit guidance which the Tribunal had found to be incorrect.

2.3)  In the second Reference case, the Attorney General referred to the Tribunal a number of questions about the charitable status of a hypothetical charity established for the relief of poverty and which required its beneficiaries to qualify as such by reference to familial ties, profession or employment, or membership of an unincorporated association. The Tribunal answered the questions and confirmed that such charities meet the public benefit requirement for charities established for the relief of poverty.

2.4)  There are currently no References before the Tribunal. The question of whether the Charity Commission should be able to make a Reference to the Tribunal without the prior consent of the Attorney General is one of the issues currently being considered by the Law Commission.

2.5)  Under the current statutory framework, References are made to the First-tier Tribunal. However, the Chamber President has the power to transfer a case from the First-tier Tribunal to the Upper Tribunal under rule 19 of the Tribunal's rules. So far, this discretionary power has been exercised for References because, as noted above, decisions of the Upper Tribunal can create legal precedent and References are intended to clarify grey areas of charity law.

3) How long do appeals to the Tribunal take from the point of application to getting a result? Has this changed since the 2011 Act?

3.1)  A performance target is set by Her Majesty's Courts and Tribunals Service for the disposal of charity appeals in the First-tier Tribunal. This is for 75% of cases to be disposed of within 30 weeks. The official statistics measure cases from the date on which the Notice of Appeal is received by the Tribunal administration to the day on which the Tribunal's final decision is released to the parties. Those figures are as follows:
Reporting year ReceiptsDisposals % achieved 30wks
08 to 091 5N/A
09 to 107 786%
10 to 1112 8100%
11 to 126 989%
12 to 136 367%*
13 to 1419 1771%*
14 (to end of Sep 14) 128 83%*

Source: Tribunals Quarterly and Annual Statistics, MoJ. (NB Data for the period October to December 2014 is scheduled to be published 12 March 2015 by the MoJ). *Internal HMCTS management information.

The Tribunal maintains a public register of First-tier cases on its website which lists each case when it is opened and provides the dates and venues of each hearing, contains a link to the Tribunal's directions and decisions and shows the number of weeks taken to dispose of every case. That register can be accessed here: http://www.justice.gov.uk/
downloads/tribunals/charity/charity-register-cases.pdf

3.2)  The procedural timetable for each First-tier case is set by the Tribunal Procedure Rules. Whilst the Rules establish a set number of weeks for each stage, the Judge always has discretion to shorten or lengthen the timeframe at the request of the parties or on his or her own initiative. The timetable is generally as follows: an Appellant has 42 days from receiving the Charity Commission's decision to make an application to the Tribunal. The application can be submitted on-line and there is no fee to pay. The Charity Commission then has 28 days in which to file its Response to the Notice of Appeal. The Appellant then has 28 days in which to file a Reply (this step is optional). If the Appellant chooses to file a Reply then the Charity Commission has 14 days in which to make secondary disclosure. The case is then listed for hearing on a date and at an HMCTS venue convenient for the parties. The Tribunal's decisions are usually reserved and released by e-mail to the parties a few weeks after the hearing.

3.3)  Not all cases proceed to a final hearing. For example, the parties may ask the Tribunal to "stay" proceedings while they negotiate and this may lead to a case being withdrawn or disposed of by a consent order. Occasionally, cases are "struck out" by the Tribunal as having no reasonable prospects of success or because it transpires that the Tribunal has no jurisdiction in relation to them. If there is an onward appeal to the Upper Tribunal then clearly it will take longer for the parties to obtain a "result".  

3.4)  The Charities Act 2011 was a consolidating Act and did not alter the statutory framework for bringing an appeal to the Tribunal. As such, it has not itself affected the disposal time for cases in the Tribunal. As can be seen from the table above, there has been a recent increase in the number of cases coming to the Tribunal but this would appear to derive from a change in the pattern of regulatory activity by the Charity Commission (for example, a significant increase in the number of statutory inquiries) rather than from any changes to the statutory regime itself.

4) It has been suggested to the Committee that Schedule 6 to the 2011 Act should be removed and that the following should be provided:

(a) a right of appeal on a point of law against a decision of the Commission; and

(b) a right to seek a review of the Commission's decisions.

From a practical perspective and with regard to the functioning of the Tribunal, what would be the impact on the Tribunal of such an approach?

4.1)  As noted above, the function of Schedule 6 to the 2011 Act is to describe which decisions of the Charity Commission are capable of appeal to the Tribunal, who has a right to bring an appeal, and what powers the Tribunal may exercise if it allows an appeal.

4.2)  I was aware that Lord Hodgson's Report[337] had suggested the replacement of the list of appealable decisions in column one of Schedule 6 with a more through-going right of appeal against any decision made by the Charity Commission. It is not appropriate for me to comment on the merits of such a change of approach, which is properly a matter for Parliament.

4.3)  I would comment that, from a practical perspective, the current format of Schedule 6 has caused considerable confusion amongst the Tribunal's users. The average charity trustee does not generally know which section of the 2011 Act has been relied upon by the Charity Commission to make the decision which they seek to challenge, with the result that they do not know where to look for it in column one of the table and so cannot readily identify whether they have a right of appeal against it. The current system relies upon the Charity Commission staff to identify clearly the legal provenance of the decision they have taken and to notify the addressee of their consequential right of appeal to the Tribunal, if appropriate. This does not always happen, with the result that the Tribunal's administrative staff (and I!) spend a lot of time working out whether decisions that have been sent to us are within or without the Tribunal's jurisdiction. Consequently, and from a practical perspective, there could be merit in a system of decision-making by the Charity Commission which allows potential appellants to understand more easily what rights of appeal they may have. Schedule 6 also does not distinguish between those decisions in column one which are capable of appeal and those which are amenable to review only, as that distinction is made elsewhere in the Act. From a practical perspective, I would favour an approach which makes the distinction between appeals and reviews clearer to the Tribunal's users, as it understandably another major source of confusion.

4.4)  I was not aware it had been suggested that the current de novo jurisdiction for charity appeals should be replaced by appeal to the Tribunal on a point of law only, as is implied by this question at (a). Once again, that is a matter for Parliament, but from a practical perspective I wonder how easily a charity trustee would be able to identify an alleged error of law and I would suggest that such an approach could lead to an increased volume of preliminary work by the Tribunal in establishing whether an arguable error of law had been identified in the grounds of appeal. Clearly, such an approach would significantly reduce the current rights of appeal for charities because at present they may challenge a decision of the Charity Commission in the First-tier Tribunal on any basis, whilst appeals on a point of law only are reserved for onward appeals to the Upper Tribunal.

4.5)  Another matter which has arisen in the Tribunal from time to time is the question of whether the Charity Commission has made a decision, or not, in the context of a long-running correspondence. I would consequently, from a practical perspective, favour a system which allows the Charity Commission to signal clearly that it has made a decision which engages rights of appeal.

5) From a practical perspective and with regard to the functioning of the Tribunal, will the new powers for the Commission which are included in the Bill require any amendment to Schedule 6 (beyond the specific amendments made on the face of the Bill) to provide powers of review or appeal to the Tribunal?

5.1)  With the greatest of respect, I would prefer not to answer this question as I do not think I can do so without commenting on the effect of draft legislation which I may, in due course, be required to interpret in my judicial capacity.

I am grateful to you for your invitation to provide this evidence and I hope it is useful to the Committee.


332   Unfortunately as Judge Lane's appointment is recent, he is not yet shown on the attached chart. Back

333   The chart is publically available here: http://www.judiciary.gov.uk/wp-content/uploads/2012/05/ tribunals_chart16122014-2.pdf [accessed 29 January 2015] Back

334   The Schedule was amended by The Charitable Incorporated Organisations (Consequential Amendments) Order 2012 to add new appeal rights in respect of Charitable Incorporated Organisations-see http://www.legislation.gov.uk/uksi/2012/3014/article/8/made Back

335   Secretary of State for Justice v RB (2010) UKUT 454 (AAC) Back

336   http://www.tribunals.gov.uk/financeandtax/Decisions.htm#cha Back

337   https://www.gov.uk/government/consultations/charities-act-2006-review Back


 
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