England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST
ChD

		Courtroom No. 2 Strand London WC2A 2LL
		8th November 2019

MR JUSTICE MORGAN:

1. This is an application under Section 336 of the Charities Act 2011 and CPR81.15. The application is by the Charity Commission for England and Wales and the respondents are Raymond Wright and Susan Wright. The application was listed in the cause list in an anonymised form. I do not know how that came about. I was not asked to permit that to be done. At the beginning of the hearing, Mr Cohen who appears for the Charity Commission raised with the court the question of whether that was an appropriate course, and I then indicated that there was no fact or circumstance in this case which would make it appropriate to anonymise this application. Similarly, the application has proceeded in open court.
2. Procedurally, the matter arises in this way. Pursuant to Section 46 of the Charities Act 2011, the Charity Commission may institute certain inquiries with regard to charities. Pursuant to that section, the Charity Commission has instituted an inquiry into a charity known as the Darren Wright Foundation. The Commission has then exercised its powers under Section 47 of the Charities Act 2011 and has given a direction to Raymond Wright and a direction to Susan Wright requiring them to provide specified information as to the charity.
3. Section 47(2) is in these terms :

"For the purposes of an inquiry, the Commission, or a person appointed by the Commission to conduct it, may direct any person –

(a) if a matter in question at the inquiry is one of which the person has or can reasonably obtain information –

(i) to provide accounts and statements in writing with respect to the matter, or to return answers in writing to any questions or inquiries addressed to the person on the matter, and

(ii) to verify any such accounts, statements or answers by statutory declaration;

(b) to provide copies of documents which are in the custody or under the control of the person and which relate to any matter in question at the inquiry, and to verify any such copies by statutory declaration;

(c) to attend at a specified time and place to give evidence or produce any such documents

But this is subject to the provisions of this section."

4. Section 47(5) is one of the provisions of the section to which Section 47(2) is subject and that provides; 'A direction under subsection (2)(c) may not require a person to go more than 10 miles from the person's place of residence unless those expenses are paid or tendered to the person.'
5. In this case, where there has been a direction given by the Commission to a person, and I am asked to decide whether that direction has been complied with, it may or may not be necessary for the court to satisfy itself that the person to whom the direction was given is a person who has or can reasonably obtain information within section 47(2) (a). Similarly, it may or may not be necessary for the court to ask itself whether documents which are requested by the direction are in the custody or under the control of the person within section 47(2)(b). Although it may not be necessary (I do not give any ruling on that), I have investigated that question in the course of this hearing.
6. What is known about the respondents, Raymond Wright and Susan Wright, is that they were original trustees of the relevant charity, founded in 2016. The date of incorporation was 16 May 2016. They remained trustees until 12 March 2018 when they were removed from the Charities Register of Trustees by the Commission's online system and the directions in question in the present application were eight days later on 20 March 2018.
7. Section 47(2), when it refers to any person, does not restrict its operation to a person who is a trustee at the date of the direction. "Any person" means what it says although further paragraphs of section 47(2) indicate that in relation to a person the question may have to be directed to things which the person can provide or deal with. The other material I have as to the involvement of Raymond Wright and Susan Wright in this charity is that the court has been provided in the last week or so with a document which is headed: "Statement on behalf of Mr R D G Wright and Mrs S B Wright". The statement is not signed, it does not say it has been prepared by one or both of them. It has been volunteered on their behalf. If I were to pay full regard to the content of the statement I would reach the conclusion that the statement is trying to explain that Raymond Wright and Susan Wright, certainly some of the time, were not involved in day-to-day matters in relation to this charity. The statement does not go further to give any basis for thinking that Raymond Wright and Susan Wright are not proper persons to receive a direction under section 47(2). There is nothing to indicate that they are not persons who have or could reasonably obtain the information requested or that they are not persons in whose custody or under whose control there are the documents requested.
8. I have been somewhat tentative in referring to this statement as Mr Cohen has pointed out that it may be the case that Raymond Wright and Susan Wright cannot be required to provide information in response to an application of this kind. I do not give a ruling either way about that. If they were not obliged to provide it and they were not told that they were under no such obligation and should not incriminate themselves then I should be guarded about my use of this statement.
9. If I put the statement on one side, then there simply is no material which is to be put alongside the fact that Raymond Wright and Susan Wright were trustees from the beginning of the incorporation of this charity until eight days before the relevant direction and they have not put forward any material to suggest they are not proper persons to receive a direction under section 47(2). Having gone into that matter, there is no reason for me not to treat the directions given this case as valid directions. Therefore, I will proceed to consider what was done or not done in response to the directions.
10. Returning to the procedural aspects of the matter, before reaching section 336 of the Charities Act 2011, I need to go to section 338(2) of that Act which says section 336 applies to a direction within section 338(1) and, in short, that includes a direction given under section 47. Section 336(1) is in these terms: 'A person guilty of disobedience to an order mentioned in subsection (2) may on application of the Commission to the High Court be dealt with as for disobedience to an order of the High Court.' I am not dealing with an order mentioned in subsection (2) but by reason of section 338, section 336 applies to disobedience to a direction given under section 47.
11. Finally on the procedure, CPR rule 81.15 provides for the procedure to be adopted on an application under section 336 of the Charities Act 2011. Rule 81.15(1) provides: 'This Section applies where by virtue of any enactment, the High Court has power to punish or take steps for the punishment of any person charged with having done or omitted to do anything in relation to a court, tribunal, body or person which, if it had been an act or omission in relation to the High Court, would have been a contempt of that court.'
12. Rule 81.15 (3) provides that an order made on an application under section 336 of the Charities Act 2011 may be made only by a single judge of the Chancery Division"). That part of the rule was the subject of comment by the Divisional Court in Simmonds v Pearce (Practice Note) [2018] 1 WLR 1849 as to whether it is appropriate to have a rule which limits such orders to judges of the Chancery Division. However, that does not give rise to a difficulty in this case. An application to a judge in the Chancery Division is an entirely appropriate course to take, and indeed the subject matter being charities, it may, in many cases, be desirable to have a judge of the Chancery Division deal with the application. In any case, that is what has happened here, and I see no reason why I should not proceed to deal with the matter where I plainly have jurisdiction to do so.
13. Without reading out the provisions, I note that rule 81.15 lays down more detail as to the procedure to be adopted on such an application. Rule 81.15(4) refers to the form of the application and the evidence in support. Rule 81.15(5) refers to personal service subject to (6) which qualifies that. Rule 81.15(7) provides for the respondent to file and serve an acknowledgement of service in a certain form. In this case, the respondents did not file and serve acknowledgements of service. Rule 81.15(7) also permits the respondents to file and serve evidence. I have been shown certain communications from the respondents and the statement to which I have referred, but there is no witness statement or affidavit from the respondents.
14. I should say that the application to me is in the form required by Rule 81.15 as is the evidence and the proceedings and the evidence have been personally served on the respondents.
15. The next matter to refer to is the fact that Mr and Mrs Wright have not attended this hearing. They have notified the Charity Commission in advance that they would not, or almost certainly would not, attend the hearing. I will, later in this judgment, deal with the correct course to adopt, where a respondent to an application for committal under CPR Part 81 does not attend the hearing. For the reasons which I will, in due course, give, I have concluded that the proper course to adopt is for me to hear this application in their absence.
16. It is necessary, however, for me to deal with the substance of the application and to refer to the facts before I give my explanation as to why I have reached that conclusion. I can take the background and factual matters in many respects relatively shortly. I will have to take more slowly the specific disobedience which is alleged by the Commission on this application.
17. There is a detailed affidavit from Mr Reddish who is a senior investigator at the Charity Commission. He has been directly involved in the matter and is able to speak from first-hand knowledge. In that affidavit he gives the history of the charity, the Darren Wright Foundation which was incorporated as I have said on 16 May 2016. He refers to the constitution of the charity and its objects and activities. He describes how there were initially five trustees. Two of the five were Raymond Wright and Susan Wright. Another trustee was their son, Scott Wright, and there were two other trustees. It seems that one of the five never acted as a trustee, but four did. However there came a point when the body of trustees was reduced to two, namely Raymond Wright and Susan Wright, and as I have indicated, they ceased to be trustees on or about 12 March 2018. I should say that the charity is named after Darren Wright, who is another son of Raymond Wright and Susan Wright.
18. Mr Reddish then describes the background to the Charity Commission opening an inquiry into this charity. It is entirely right that the court is told what the background was, but as Mr Reddish makes plain, the Commission has made no findings in the course of that inquiry and I make it clear that I make no findings as to the matters which are to be investigated by the Charity Commission. Mr Reddish then describes communications with the charity following the institution of the inquiry. There was a pair of directions, one to Raymond Wright and one to Susan Wright on 15 December 2017. Those directions were made under section 47(2) of the 2011 Act. There was a further direction, or pair of directions, on 25 January 2018, again to Raymond Wright and Susan Wright, again under the same statutory provision. On that occasion, they were asked to attend the Charity Commission's office in Taunton on a specified date, but they did not attend.
19. The next thing that happened was the giving of another pair of directions, the 20 March 2018 directions, which are the basis of the current applications. Those directions were personally served on Raymond Wright and Susan Wright and they were endorsed with a penal notice. There was some limited response to the directions of 20 March 2018 described by Mr Reddish. I should add that also on 20 March 2018, the Charity Commission made an order under section 84(A) of the 2011 Act requiring the charity to cease fund-raising.
20. Matters moved on, and on 7 September 2018 the Charity Commission made orders under section 335(1) of the 2011 Act. The orders required each recipient to comply with the direction given to him or her on 20 March 2018. For reasons which are explained in the affidavit, the Commission has not brought formal proceedings for breach of the September 2018 orders. Instead, as I have explained, the application under Section 336 and 338 combined is based upon the earlier direction of 20 March 2018. However it is relevant that the orders were made on 7 September 2018 because the lack of substantive response to those orders is part of the background which is material when considering the gravity of any disobedience which might be found to have occurred.
21. On 9 October 2018, the Charity Commission received an email from Scott Wright. He referred to "regaining control" of a certain email address. He said he would be answering all the questions directed to the charity, but he has not done so. He also made this statement: "Mr R Wright and Mrs S Wright do not have any access to paperwork concerning your questions nor have they at any time". Mr Scott Wright has not put in any evidence in these proceedings, so whilst I note that statement made by him, I have already expressed the conclusion which I have reached, taking into account that statement, that Mr Raymond Wright and Mrs Susan Wright do have access to paperwork concerning the questions and they are properly persons to whom a direction can be given about paperwork pursuant to section 47(2).
22. Indeed, to stay on the point made by Mr Scott Wright, the Charity Commission replied saying it did not understand why Raymond Wright and Susan Wright could not have access to the paperwork and there has been no further explanation forthcoming.
23. Mr Reddish then makes the statement that the respondents have not complied with the relevant directions. He gives some detail as to the level of concern on the part of certain members of the public in relation to the alleged activities of this charity, but he stresses that no findings have been made by the Commission.
24. That, in summary, is the evidence before me. Mr Reddish exhibited a large number of pages to some of which I may need to refer. The certificate under section 336 and CPR81.15 is in proper form and it sets out the background which I need not go to again. It is described by Mr Reddish. The certificate also refers to the relevant directions on 20 March 2018 and it says there has been personal service of the directions. It refers to some communications with representatives of the charity. The conclusion of the certificate identifies count one and count two which are the definitions of the disobedience which I must consider. Count one is in these terms: 'in breach of the Commission's direction against him of 20 March 2018, Mr Raymond Wright failed to provide the documents and answers to questions specified in the schedule to that direction by 5pm on 6 April 2018, or at all.' Count two refers to Mrs Susan Wright, and it is in essentially the same terms as count one.
25. I will go to the directions given to the two respondents on 20 March 2018. There are two separate directions, one to each of the respondents. The directions are in the same terms. I will take, because it appears first in the bundle, the direction given to Susan Wright. The direction states that the Charity Commission revoked its earlier directions, effectively clearing the way for the giving of this new direction. The direction is endorsed with a penal notice. The schedule to the direction has 15 numbered paragraphs, although there are two number 10s, so there are 16 paragraphs in all. With the assistance of Mr Cohen and the evidence in this case, I have gone through each of these 16 paragraphs. Before I make specific findings, I expressly direct myself that the burden of proving that there has been disobedience in response to these directions is on the Charity Commission and they must prove their allegation beyond reasonable doubt, that is to the criminal standard.
26. I will begin by indicating those paragraphs in the schedule where I am not satisfied beyond reasonable doubt that there has been a failure to comply. The point which applies to various paragraphs is a single point and that is that a number of the paragraphs require the respondent to provide a copy of any document which comes within the paragraph. I am going to err, if I am erring, in favour of the respondent, by construing the direction where it says "provide a copy of a document" as only requiring something to be done, if such a document exists. If that is the right interpretation of the paragraph, then it seems to me it falls on the Charity Commission to establish that such a document did exist, and then the non-provision of a copy is a failure to provide a copy, and in saying that the Charity Commission should prove that such a document existed, it must prove that beyond reasonable doubt. It may be that is a somewhat favourable approach to the respondents, but it is the approach I will adopt. On that basis, I am not satisfied beyond reasonable doubt that the respondents have failed to comply with paragraphs 3, 6, 8 and the second paragraph 10. It is easier to reach that conclusion in relation to some of those paragraphs than others, but perhaps generously to the respondents that is the conclusion I have reached.
27. Mr Cohen is entitled to say that one would really have expected the respondents, if they did not have such a document because it did not exist, to say "we cannot provide copies" and make their position plain. As a practical comment, I agree, but the direction did not require an explanation, it required the provision of a copy, which is different.
28. Dealing with the other paragraphs, I make the following findings: as to paragraph 1, the respondents did not provide copies of all charity minutes of meetings since the registration in May 2016 to the date of this direction. The Charity Commission earlier obtained two sets of minutes. I do not go into whether there must have been many more, maybe I could not find beyond reasonable doubt that there were any more meetings, but I can find, and I do find, on the basis of the minutes of 16 June 2017 there was an earlier meeting on 5 April 2017 and indeed there were minutes of that meeting, but they have not been provided. Paragraph one has not been complied with.
29. Paragraph two asked for a copy of the charity's draft accounts, and if they were not made available to provide an explanation. I do not find that the draft accounts were not made available, and so there was a failure to provide a copy, but I do find that there was a failure to provide an explanation, so paragraph two was not complied with.
30. Paragraph four requires details of any bank accounts. I am able to find on the evidence, beyond reasonable doubt there were bank accounts, in which case there has not been a provision of details of the bank accounts, so there has been a breach of paragraph four.
31. Paragraph five required details of current signatories of any accounts. That was not complied with.
32. Paragraph seven required a full list of the charity's beneficiaries existing since May 2016. That was not complied with.
33. Paragraph nine required financial information relating to each of the charity's current beneficiaries including the amount of funds currently being held on their behalf by the charity. That was not complied with.
34. Paragraph 10 required provision of a schedule of all payments made to PayPal from the charity's bank account. I am able to find beyond reasonable doubt that there have been some such payments and so there ought to have been a schedule. Indeed, I go further, even if there were no payments, there ought to have been a schedule in which the entry was made, 'no payments' so the first paragraph 10 has not been complied with.
35. Paragraph 11 required the provision of a telephone number. That has not been complied with.
36. Paragraph 12 required confirmation of a fact. That has not been complied with.
37. Paragraph 13 required the reasons for the website to have been taken off-line. That has not been complied with.
38. Paragraph 14 required an explanation as to why the respondents had not complied with the two earlier directions. That had not been complied with.
39. Paragraph 15 required the respondents to provide suitable dates on which they could attend a meeting with the Commission during April 2018. That has not been complied with.
40. It follows that for the detailed reasons I have just given, I make the overall finding that count one and count two in the certificate have been established beyond all reasonable doubt, to the extent that I have specified.
41. I indicated earlier that I had concluded that this was a proper case where I should hear the application in the absence of the respondents. It is not uncommon for a court hearing an application for committal under CPR Part 81 to find that the respondent to the application does not attend the hearing. In other cases, there may be various reasons for this fact. Sometimes there are good reasons, sometimes there are no reasons or bad reasons. In considering the course to adopt in such a case, it is useful to follow the approach which was adopted in a case in the Family Division, Sanchez v Oboz [2015] EWHC 235 (Fam). That is a judgment of Cobb J. In paragraph four of his judgment, he says that it would be an unusual, but no means exceptional, course to proceed to determine a committal application in the absence of a respondent. He gives a number of reasons for that general statement. I will not read out paragraph four in full, but Cobb J there stresses the criminal nature of proceedings such as this. He refers to decisions relating to criminal cases as to when it is proper and when it is not proper to try an accused in his absence. He refers to the need to make finding of fact on these applications, and that might produce the result that the court is at a disadvantage in seeking to determine matters of fact in the absence of the party. He also stresses that the finding of disobedience to an order may result in a significant penalty being imposed including the deprivation of liberty. Finally, he refers to Article 6 of the Convention on Human Rights and Fundamental Freedoms.
42. I take all that into account. At paragraph [5], Cobb J identifies nine matters which a court needs to consider. They are as follows:

"1) whether the respondents have been served the relevant documents, including the notice of the hearing;

2) whether the respondents have had sufficient notice to enable them to prepare for the hearing;

3) whether any reasons have been advanced for their non-appearance;

4) whether by reference of the nature of the circumstances of the respondent's behaviour, they have waived their right to be present, (i.e. is it reasonable to conclude that the respondents knew of, or were indifferent to, the consequences of the case proceeding in their absence);

5) whether an adjournment would be likely to secure the attendance of the respondents, or at least facilitate their representation;

6) the extent of the disadvantage to the respondents in not being to present their account of events;

7) whether undue prejudice would be caused to the applicant by any delay;

8) whether undue prejudice would be caused to the forensic process if the application was to proceed in the absence of the respondents;

9) [the terms of the overriding objective, which refers to dealing with cases justly, expeditiously, fairly, and taking steps to further the overriding objective.]"

43. That is a helpful list of relevant matters or factors. It has been applied on a number of occasions more recently. I give two examples, both decisions of Warren J, the first being Phonographic Performance Ltd v Nightclub (London) Ltd [2016] EWHC 892 (Ch) and Taylor v Van Dutch Marine Holding Ltd [2016] EWHC 2201 (Ch).
44. Taking the above list of matters, the position seems to be as follows in this case. Mr and Mrs Wright have been served with the relevant documents, including the notice of the hearing. They have had sufficient notice to enable them to prepare for the hearing. They have put forward a reason for their non-appearance. The reason is that their son, Darren, after whom the charity is named, is severely disabled. It is said that they both need to be in attendance on Darren 24 hours a day, and 7 days a week. I have not got a witness statement or any medical evidence but I entirely accept that I should proceed on the basis that Darren is, indeed, severely disabled and needs constant attendance. However, the statement that has been put forward, that I take into account for this purpose, does refer to there being care assistants attending on Darren.
45. The other matter is that there are two respondents in this case. I do not understand why it was not appropriate for at least one of them to attend the court or to have representation. As to representation, the respondents are entitled to legal aid, a point which had been explained to them by the Charity Commission. Although it would not be right to say no reason has been put forward, I am not satisfied that the reason put forward for non-attendance carries very much weight in my decision as to what should be done.
46. The next question is whether it could be said that the respondents have waived their right to be present, for example because they were indifferent to the consequences of the case proceeding in their absence. I find that formulation rather more difficult to apply, as something different from the respondents being fully aware that this hearing is taking place. If the factor is intended to identify whether the respondents knew the consequences of an application such as this, I am satisfied they were well aware of the consequences of this application proceeding and being determined. As to an adjournment, I do not see that an adjournment would change anything, so it is not a case where I should adjourn.
47. I next consider the extent of the disadvantage to the respondents in not being able to present their account of events. The respondents have been given an opportunity to present their account of events. They have essentially not put forward anything like a proper explanation for their behaviour. This case is rather more straightforward in terms of fact-finding than other cases might be where there is an application for contempt of court. I do not see the respondents as having been placed at any real disadvantage as regards their ability to communicate their position to the court.
48. The next matter is whether undue prejudice would be caused to the Charity Commission. The Charity Commission is a public body and it is acting in the public interest. On the evidence in this case, it has proper grounds for inquiring into this charity and the inquiry has received attention from persons who say they have been let down by the charity. This is a case where due administration requires the matter to proceed without delay, and delay therefore does represent a form of prejudice to the Commission.
49. The next question is whether undue prejudice would be caused to the forensic process if the application were to proceed in the absence of the respondents. Again, this touches on matters I have already mentioned. I bear in mind that the fact-finding in this case is at the more straightforward end of the spectrum, and the respondents have had an opportunity to put forward their position.
50. Finally there is the overriding objective. I conclude that I can deal with the matter justly. Plainly, dealing with it today is more expeditious. I also conclude that today's hearing could be and has been an entirely fair hearing. Of course, when one decides to take any course, one must consider what the alternative might be to that course. There are two alternatives I have considered in this case. One is adjourning the matter to another venue, in particular Bristol, where the respondents live. The respondents themselves raised the possibility that the case be transferred to Bristol, but they did not, in the end, apply to the court for the case to be transferred, therefore the case was not transferred, but steps were instead taken to make this hearing possible.
51. Furthermore, I do not regard the difficulty of travel from a home in Bristol to the High Court in London as being very significant. It is a relatively straight forward train or coach journey for anyone to undertake. It would involve the respondent being away from home, being away from Darren, for a longer period, but in the overall scheme of things, in the absence of an express application to transfer, with the case being listed here, I am not at this point going to abort the hearing and transfer the case to Bristol.
52. A further alternative which is indeed often used with an absent respondent is for the court to issue a bench warrant for the arrest of the respondent. It is well-established that the court has power to do this even in advance of a finding of contempt. However, my experience of bench warrants for the arrest of respondents is that the step taken can be a very blunt instrument, causing some hardship, and it could even be described as a draconian step to take. In many cases it is an appropriate and indeed necessary step to take, but I venture to think that if Mr and Mrs Wright were given the choice between this hearing proceeding in their absence, and them being arrested and put in the cells and brought to court, they would unhesitatingly prefer me to continue in their absence. At any rate, I do not select the alternative of issuing a bench warrant and adjourning the matter on that basis.
53. For those reasons I have proceeded with the hearing and made the findings which I have made. The next stage is to consider what procedure to adopt for the purpose of determining the penalty to be imposed on Mr and Mrs Wright for their disobedience to the directions from the Charity Commission. I can say that as I am presently advised, this is a case where a penalty of some sort should be imposed. I have the power to proceed straight to the question of penalty in the absence of the respondents. I referred earlier to the case of Taylor v Van Dutch Marine Holding Ltd where the judge made a finding of contempt and then asked himself should he deal with the penalty in the absence of the respondents, and decided that he should.
54. It is relevant to take account at this point of any submissions made to me by the Charity Commission. The penalty is plainly primarily, not exclusively, a matter for the court, but the court will want to hear the approach recommended to it by the party bringing the matter before them. The Charity Commission takes the view that it is preferable to adjourn the matter to a further hearing when the question of penalty will be determined. I can see the sense of taking that course. Following this hearing there will be a transcript of this judgment. It will be served on Mr and Mrs Wright and they will see what has been said about them. If they have not previously fully taken on board the seriousness of their position, I hope that this hearing today and my judgment will emphasise to them that they are indeed facing a court proceeding which could have serious consequences for them. The court will have to consider at the future hearing what penalty to impose. The court can impose a custodial sentence of up to two years. I doubt if this is a case for the maximum period of two years but it might be a case for a custodial sentence. The court would then have to consider whether to suspend that custodial sentence to give Mr and Mrs Wright an opportunity at last to do what they should have done much earlier. If Mr and Mrs Wright begin to understand that that is what they are facing, then it would be very sensible for them to comply to the fullest extent with the directions that have been served upon them. It may therefore be helpful to the court, when it decides what penalty to impose, to know what the reaction of Mr and Mrs Wright to this decision. I do not say that that would be appropriate in every case, but I am satisfied there is merit in taking that course in this case.
55. Accordingly, I will adjourn the matter to a date to be fixed. The matter should come back to the court without significant delay, but not so quickly as to prevent Mr and Mrs Wright complying with the directions in an orderly fashion over the next days or possibly weeks. I also want to make explicit, that if another hearing is fixed and Mr and Mrs Wright do not attend that further hearing, then the court has the power to issue a bench warrant for their arrest for them to be brought to court for sentence to be passed upon them. As to the costs of this application, again, I will adjourn the question of costs to a future hearing on a date to be fixed.
End of Judgment