Kids Company judicial review – winners or losers?

Philip Kirkpatrick reflects on the recent High Court decision on the judicial review case brought against the Charity Commission in relation to its 2022 inquiry report into Kids Company.

Many people will have thought that the Kids Company case was all over long ago. Well, it is now, following a recent High Court judgment in judicial review proceedings. These were originally brought by Camila Batmanghelidjh (the founder and former CEO of Kids Company) and continued after her death in 2024 by Michael-Karim Kerman (former clinical director at Kids Company).

Both the Charity Commission and the applicant are claiming victory in the case. Who is right?

The background to this is that not only were there court proceedings against Camila Batmanghelidjh and the former trustees of the charity but there was also a Charity Commission inquiry. The court proceedings were brought by the Official Receiver, who had sought to have the defendants struck off as company directors. Those proceedings were so hopelessly misconceived that when the defendants were successful, they were awarded indemnity costs against the Official Receiver.

Once that case was over, the Charity Commission was able to finish its inquiry and publish its report into Kids Company, which it did in 2022. It was clear from the report that the Commission didn’t fully share the High Court’s view of the matter. Camila Batmanghelidjh decided to challenge the report and was granted permission by the court to do so (there is no automatic right to bring judicial review proceedings).

A judicial review application is a challenge to the lawfulness of a decision or action of a public authority or of anyone else exercising a public function. It is not the function of the court to decide if the decision was right or wrong; the question is whether the decision was lawful. The traditional grounds for review are that the action or decision is illegal, irrational or procedurally improper.

In this application it was argued that the Charity Commission had approached their inquiry into Kids Company with a predetermined view, that large parts of their inquiry report were irrational, and consequently that the report itself was unlawful.

‘Irrational’ is a big word. It has to be considered in the context of the wide discretion that public authorities are allowed by the courts to enable them to carry out their functions. One famous formulation of what ‘irrational’ means in a judicial review context is that a decision must be “so outrageous in its defiance of logic or accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it.” That is a high bar for any claimant to get over. Conversely, it is a very low bar for a public authority to get under. It is very hard to succeed in a judicial review application founded on irrationality.

For the most part, the application was not successful. Mr Justice Sheldon decided that, “The fact that the Report contains errors, and even a small number of irrational findings or observations, does not mean that the overall document is irrational”. He also did not find “apparent predetermination as to the outcome of the Report”, stating that a “fair-minded and informed observer would not view the Report as reflecting a predetermined decision on the part of the Commission to find ways of doing down the charity and its trustees just for the sake of it”.

However, he did decide that two parts of the report were irrational. These were comments about payments to the “top 25” beneficiaries of Kids Company and comments about the impact of a lack of adequate reserves. The comments about payments to the top 25 “[gave] rise to the innuendo that the payments… may not have been justified”. The judge found this was “unbalanced and one-sided” and “extremely unfair” given findings in the 2022 High Court case that such payments had been scrutinised adequately by the charity’s trustees. The report’s comments about reserves carried an implication that “if the trustees had not made a decision to operate with a low level of reserves they might have been able to save the charity from insolvency”. This flatly contradicted the High Court in the disqualification proceedings, which had been clear that even three months’ reserves would have been unlikely to save the charity. In reaching his conclusions, the judge in this case was very conscious of the implication in the Charity Commission report that the trustees were to be criticised about these matters when the High Court, after properly testing all the evidence in a ten week trial, had been clear that they should not be.

‘Unbalanced and one-sided’ and ‘extremely unfair’ are very harsh judicial criticisms of a public authority. For the Charity Commission, which needs to promote public trust and confidence in charities as well as foster a regulatory environment in which good people are willing to give service to society as trustees, they should give long pause for thought.

So, with both sides claiming victory, who won? The judge himself thought it was a draw. While noting that the application had not succeeded in large parts, he said in the sealed order, “In substantive terms, it seems to me that there was no overall winner or loser in this case” and neither side was ordered to pay the other’s costs.

The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further information.