In charity proceedings relating to the election and appointment of trustees in an unincorporated charity, a recent decision has confirmed that members of unincorporated charities are fiduciaries. The decision in Jaffer v Jaffer [2021] EWHC 1329 (Ch) follows the Supreme Court’s 2020 decision in the Children’s Investment Fund Foundation (CIFF) case, that members of a charitable company have a fiduciary duty to act in the best interests of the charity.
Jaffer v Jaffer concerned a disputed election in the World Federation of the Khoja Shia Ithna-Asheri Muslim Communities, an unincorporated charity. The charity’s constitution specified that a president would be elected in a stand-alone election and three ‘Office Bearers’ would then be elected at a conference of members, with a further two being appointed by the newly-elected president. The president and the Office Bearers are the charity trustees for the purposes of charity law.
An election for the president was held in January 2020, producing a clear winner by a substantial margin; Safder Jaffer. A conference was to be held in March 2020 to elect the Office Bearers, but did not take place due to the outbreak of Covid-19. Furthermore, complaints were made about the conduct of the presidential election and the eligibility of Safder Jaffer. To resolve the inability of the conference to meet, the Charity Commission made an order in June 2020 that a conference should be held by June 2021 and in the meantime, the current Office Bearers should continue in post. However, the Office Bearers all resigned and held a meeting to appoint interim Office Bearers.
As a result, complaints were made to the Charity Commission about the appointments. The Commission stressed the need for disputes to be resolved internally and initially refused permission for the claimant, a member of the charity, to bring court proceedings until a mediation was carried out. The mediation was unsuccessful and in the meantime, the claimant successfully applied to the court to bring proceedings seeking to appoint a receiver to oversee a fresh presidential election.
Safder Jaffer and the interim Office Bearers cross-applied to the Court for: a) authorisation to continue as office bearers until the delayed conference; b) permission to hold the conference remotely; and c) authority to vote to affirm Safder Jaffer as president and direct a further presidential election.
The claimant’s application was dismissed as the Court said the conference should address the issue of the validity of the January 2020 election before the court intervened. The Court appointed the interim office bearers to hold office until the 2021 conference and gave permission for the conference to be held remotely.
The Court also confirmed that the members attending the conference were fiduciaries and therefore “must vote in the best interests of the charity and not, for example, with regard to any personal allegiance they may hold to one candidate or another or to one side of this dispute or the other.” This confirms that decisions made by members relating to the administration of the charity are an exercise of fiduciary power and could be challenged if it could be shown a member was not acting in the best interests of the charity.
However it should also be noted that the Court did state that the principle of non-intervention applies to the decisions of members of unincorporated associations as fiduciaries, where there is not a breach of duty.
The implications of the CIFF ruling are still being considered by charity practitioners and the Charity Commission is expected to provide guidance for charity members on their fiduciary duties. The ruling in Jaffer v Jaffer now also extends these considerations to unincorporated charities.
