The High Court has ruled against the Official Receiver in his bid to disqualify the former trustees and CEO of Kids Company from acting as directors.
In a 225 page judgment Mrs Justice Falk found that the public needed no protection from the ‘highly impressive and dedicated’ trustees and that she was ‘wholly satisfied’ that disqualification was not warranted.
The disqualification proceedings were commenced in 2017 after a lengthy and extensive investigation into the reasons why Kids Company was forced to close.
There were no allegations of dishonesty or self-serving conduct, or criticism of spending on any individual child, in spite of the scrutiny which Kids Company’s spending received in the Official Receiver’s investigation and the blaze of publicity which preceded it. Instead the case concerned alleged financial mismanagement, with a central complaint that the defendants caused or allowed Kids Company to operate an unsustainable business model which was underpinned by criticisms of various features of Kids Company’s operations.
The defendants were the former trustees of Kids Company and its founder and CEO, Camila Batmanghelidjh. Although Ms Batmanghelidjh was not appointed as a director, the Official Receiver maintained that she was a de facto director and so liable to disqualification in the same way.
With the exception of one former trustee, all the defendants chose to defend the claim which was heard in the High Court over 10 weeks in October to December 2020.
A trial of charity trustees on these grounds is unprecedented and the message that highly qualified, diligent and honest charity trustees, doing their best to rescue a charity in difficult circumstances, might be pursued in this way by the Official Receiver has caused much disquiet in the sector.
Our society depends on individuals being prepared to take up trustee roles on an unpaid basis, volunteering their time on top of personal and professional commitments, as the trustees in this case did.
Even though they knew right was on their side, it took great courage to defend proceedings on this scale, pitted against the unlimited resources of the State and exposed to immense financial risk in the case of a loss. That courage has benefitted the whole charity sector as the defendants’ total vindication sends a clear message to trustees that they will continue to receive the protection of the Court when making honest and reasonable judgements under difficult circumstances.
Bates Wells acted for five of the seven former trustees: Richard Handover, Francesca Robinson, Jane Tyler, Andrew Webster and Alan Yentob.
The lawyers acting for them were:
- Philip Kirkpatrick, Head of Charity and Social Enterprise
- Robert Oakley, Head of Dispute Resolution
- Lucy Rhodes, Senior Associate, Charity and Social Enterprise
- Charlie Miller, Associate, Dispute Resolution
Bates Wells instructed George Bompas QC of 4 Stone Buildings and Catherine Doran of Radcliffe Chambers to represent their clients.