Kent based horse charity National Equine Training Trust (NETT) was removed from the Register of Charities in 2013 on the grounds that it was no longer operating following its failure to submit accounts. NETT is a charitable trust, registered in 1995. Preceding the removal from the register, the Charity Commission had appointed three new trustees and had authorised the transfer of the charity’s land to them in 2012.
In November 2018 an adverse possession claim was made for the charity’s land by an individual claiming possession by virtue of the fact that they had been occupying it continuously for a period of time. The Charity Commission, having been named a respondent in the proceedings in 2019, established that NETT’s trustees were not responding to the proceedings. The interests of the charity were not being represented, resulting in a significant risk of NETT losing its property.
Following this discovery, the Charity Commission used its statutory powers to open an inquiry into two points of concern:
- Had NETT continued to operate since it was removed from the register in 2013?
- Did NETT have validly appointed trustees and if so, were they willing, able and/or capable to take the necessary actions to protect the charity’s property?
In respect of the first point, the Charity Commission found that the charity was not operating; there had been no movement on the charity’s bank account since 2015 and Land Registry records had not been updated since 1995. As the charity was unincorporated it was unable to hold property in its own name. Two of the trustees appointed in 2012 were now residing out of the jurisdiction and did not engage with the Commission, whilst the third trustee had died.
On the second question, the inquiry found that NETT had no trustees who were willing and/or capable of protecting the land. To ensure that the proceedings were adequately defended and the land remained in the charity’s possession the Charity Commission appointed the Official Custodian for Charities as a holding trustee, following which the proceedings were struck out.
The inquiry concluded that the former trustees had mismanaged NETT by failing to manage its property responsibly, and as a result almost lost a valuable piece of land secured only due to the Commission’s intervention. The Commission further concluded that if it had been the intention of the former trustees to wind up the charity, then they should have acted to dispose of the land in accordance with the charity’s governing document.
Following these findings, the Commission exercised its powers to remove the two trustees who could not be contacted, and appointed two new trustees in their place to address the ‘governance vacuum’. NETT has subsequently been reinstated onto the Register of Charities.
The findings of the NETT inquiry make it clear that charity trustees have a legal duty to manage charity property responsibly and to avoid exposing the charity’s assets to undue risk, which means winding up a charity and disposing of assets in accordance with the governing document and charity law when it becomes inactive. The Commission also noted that they may remove a trustee resident outside of England and Wales, and where their absence impedes the proper administration of the charity.
