Weighing the options

The Charity Tribunal was created by the Charities Act 2006. It deals with appeals and applications for review of various decisions, orders and directions of the Charity Commission. It is also able to consider references by the Attorney General or the commission, with the Attorney General's consent, concerning the operation or application of charity law.

In 2009, two important steps were taken to integrate the Charity Tribunal into the unified tribunals system. The first was the absorption of the Charity Tribunal into the First-tier General Regulatory Chamber and the adoption of new rules governing its procedures. The second was the creation of a right of appeal from decisions from the Charity Tribunal (now called the First-tier Tribunal (Charity)) on a point of law to the Upper Tribunal, instead of to the High Court.

One of the tasks for the Charity Commission in the coming year will be to consider whether that restructuring will require its own procedures to evolve and be modified, and whether the new structure offers opportunities that deserve to be explored.

Decision review and appeals to the tribunal

The more pressing task arises from the adoption of the new rules that now govern the practice and procedure of the Charity Tribunal (The Tribunal Procedure (First-tier Tribunal) (General Regulatory Chamber) Rules 2009). Under the Charity Tribunal's original rules (The Charity Tribunal Rules 2008) only 'final decisions' of the commission could be challenged in the tribunal. A final decision was defined as 'the definitive decision of the commission that is the subject matter of the appeal or application'. The practical effect of that definition was that a decision could be appealed to the tribunal only if it had been made through the commission's decision-review procedure. However, the new rules permit a commission decision to be appealed directly to the tribunal, without first going through our decision-review process.

The commission makes thousands of decisions each year that affect charities, charity trustees, the beneficiaries of charities and other interested parties. For example, it makes decisions about whether or not to register organisations as charities. It decides whether or not to alter the trusts of charities by scheme, to sanction changes to the objects of charitable companies, and to authorise particular transactions by charities. It also makes decisions about whether or not to exercise its extensive information gathering powers, powers of inquiry and consequent powers to take protective and remedial action.

Accordingly, the commission has to have procedures in place that enable it to generate decisions which it is happy to stand by and, if necessary, to defend against legal challenge. Those procedures ensure that decisions are taken either at an appropriate level or can be reconsidered at a more senior level.

For some decisions, those procedures require the decision to be made by a more senior member of staff than the one who conducts the casework. Decisions that are escalated in that way include those concerning whether or not to make a scheme (where publication of the draft scheme leads to representations from members of the public) and decisions about the use of our more intrusive powers of protection and remedy. The final decision to remove a trustee, for example, is made by members of the commission's board. Decisions made in this way then stand as the commission's final decision on the matter. In other cases, the commission is willing to reconsider at a more senior level a decision at the request of individuals who are dissatisfied with it.

So, is it likely that the change in the tribunal rules will encourage individuals to appeal to the tribunal rather than invoke our decision-review process? The commission believes that its decision-review procedure will continue to be an attractive first resort for those who are dissatisfied with its decisions. Decision review involves a genuine reconsideration of a commission decision and offers a real prospect of the decision being overturned where this is justified. In the first financial year since the current decision-review procedure was introduced (2008-09), a total of 17 decisions have been reviewed (that is, decisions that are capable of being appealed or reviewed in the Charity Tribunal). Of those decisions, 29 per cent were reversed on review and a further 18 per cent were modified in one way or another.

The decision-review procedure is usually conducted quickly and within the three-month target the commission sets itself (although it is fair to say that complex cases can take longer). The decision review in the Catholic Care case, for example, which was subsequently challenged in the tribunal, took 32 calendar days.

Decision review is procedurally straightforward and is initiated simply by a request for a review, setting out reasons why the decision is thought to be wrong. An applicant may put as much, or as little, effort into making a case as he or she wishes. There is no 'hearing' as such, but applicants are given (and usually take up) the opportunity to speak informally to the decision maker. Very often during this process, new facts emerge which may lead the commission to vary or change its original decision.

Following a review, the commission will set out very clearly the reasons for its decision, giving those involved a full opportunity to appeal to the tribunal should they feel this to be appropriate. Every effort is made to allow those challenging a decision to put their case, and for the commission to understand it.

Few challenges

But would it matter if individuals who are unhappy with commission decisions applied immediately to the tribunal without taking advantage of the commission's decision-review process? The important point is that those who feel for good reason that the commission's decision is wrong have an opportunity to challenge it, and can do so in a way which is helpful to them. The most contentious decisions are usually escalated to senior levels within the commission anyway (such as decisions to suspend or remove a trustee, or to appoint an interim manager) and will in any event represent the commission's settled view. In fact, comparatively few of the commission's decisions are challenged at all. In the financial year 2008-09, the commission made an estimated 8,364 decisions that were capable of being appealed or reviewed in the tribunal. Only 17 of those decisions went through the decision-review process, and only two of them were subsequently appealed to the tribunal.

Currently, few commission decisions are challenged. It may be that there is, in fact, generally a high level of satisfaction with the decisions that the commission makes. The commission has a recognised reputation for its expertise in charity law and practice and applies this expertise to its decisions, which it approaches in a risk-based and proportionate way. It seeks to work with charity trustees and interested parties to ensure that its decisions deal with the issues and concerns they have. Satisfaction with the commission's decision making is most obvious in the case of registration applications. Of the 1,461 unsuccessful applications to register organisations as charities that were made last year, only 42 were the subject of outright refusals by the commission '“ in the other cases, the application was simply abandoned following exploratory correspondence.

That said, the change in the tribunal rules does raise the possibility of an appeal to the tribunal against a decision which the commission would have reversed had it had the opportunity to reconsider it. In such a case, both the commission and the appellant could incur avoidable expense, delay or inconvenience as a result of the appellant's failure to take advantage of decision-review. We continue to urge those disappointed with the commission's decisions to use the decision-review process, given its accessibility and reduced formality. Clearly though, there will be cases where the commission is clear about the robustness of its decisions and direct recourse to the tribunal may be the right course to take.

The commission has a general interest in maintaining effective, user-friendly procedures, particularly those designed to ensure accountability and redress for those who disagree with its decisions. With this in mind, it collects feedback from individuals who invoke its decision-review process, and will modify those procedures if they are not perceived to be fair, clear, timely and straightforward. Of course, the commission also fully supports the introduction of the tribunal as a valuable addition to remedies available to those who disagree with its decisions.

Developing charity law

The legislation which established the Charity Tribunal also created a right of appeal against its decisions to the High Court, but only on points of law and only with the permission of either the tribunal or the High Court. The recent reforms of the tribunal have substituted a right of appeal to the Upper Tribunal (in which High Court judges will sit). Again, appeal may be made only on points of law and a would-be appellant must obtain the tribunal's permission. On receiving an application for permission to appeal a tribunal decision, the tribunal is required to consider whether or not to review its decision.

The Upper Tribunal will also hear first instance cases in the charity jurisdiction that raise complex or unusual issues, or are of such importance that they merit being dealt with by the Upper Tribunal (which, unlike the First-tier Tribunal, is a superior court of record, able to set legal precedent). The tribunal rules provide for the transfer of a case to the Upper Tribunal on the direction of the president of the General Regulatory Chamber, with the concurrence of the president of the relevant Chamber of the Upper Tribunal.

The possibility that legal issues of wider significance for the sector and the public might be decided in the Upper Tribunal, whose decision will establish legal precedent, makes the prospect of referring questions of charity law as a reference to the tribunal an attractive option. This is a much needed aspect of the tribunal's jurisdiction, given that opportunities for the authoritative clarification of charity law by the courts in the past have been rare. There are several difficult areas of charity law, where there is either no contemporary or relevant case law, which would certainly benefit from authoritative clarification. The commission will need to explore, in consultation with the Attorney General '“ whose consent is required for a reference by the commission to the tribunal '“ whether this possibility might appropriately (and, of course, affordably) be invoked.