Meet our Expert

Thomson, Ben ClossickBen Clossick Thomson – Barrister

Ben is a barrister specialising in intellectual property and commercial litigation at Arnold & Porter.  In addition to advising on copyright, trade mark, design, patents and breach of confidence matters, Ben regularly assists charities in resolving legal disputes.

 

 

 

“How can a charity remove a name from their bank account if the individual has been removed from the board as chair of trustees due to a dispute within the charity, but the individual is refusing to comply? The individual concerned has made allegations of fraud, verbal, physical and intimidation against the Treasurer who has died suddenly. All of the complaints against him have been disproved. The bank is insisting that we need the former Chair’s signature to add signatories but as she won’t comply and the other signatory is dead what can we do?”

 

The answer

Although the bank’s stated position may be frustrating, it can be appreciated that they are taking a conservative approach and that they simply want to ensure that the bank is not risking becoming embroiled in a dispute between the charity and the ex-Chair.  If the bank cannot be persuaded that the Chair has been properly removed and that the funds in the account are held for the benefit of the charity, then it may be necessary to obtain an Order from the courts to provide the necessary comfort to the bank.

The remedy in the form of a court Order to add new signatories and remove the ex-Chair as signatory can be sought by commencing a claim against the ex-Chair for a breach of trust.  Even though this person may no longer be the Chair of the charity, she is still effectively holding property which is not hers, and which should be made available for the purposes of the charity.  To frustrate the use of those funds amounts to a breach of trust.

The ex-Chair may attempt to defend against such a claim by denying that she has properly been removed.  Her concerns relating to the Treasurer may well be raised.  However, the charity will be able to reply by showing that all procedures for the Chair’s removal have been properly followed and that all of the complaints against the Treasurer have been investigated and disproved.  Indeed, it may be that a well written solicitor’s letter clearly setting out the relevant facts and matters will help the ex-Chair to see sense and circumvent the need to commence a court claim at all.

Of course, instructing solicitors and starting court proceedings costs money.  If the bank account at the centre of the dispute is the charity’s only source of funds, that will create its own issues.  In this connection, it may be possible to negotiate a funding arrangement with the solicitors which will defer payment of any fees until the end of the case, or the charity may be able to find solicitors willing to act on a pro bono basis.  However, it will be necessary to pay court fees and thought will need to be given as to how to fund this.  As a practical matter, it may make sense to establish a new bank account so that any income to the charity going forward is accessible without recourse to the ex-Chair, pending the obtaining of an Order from the court.

As an alternative to seeking help from the courts, it may be worth exploring whether the Charity Commission would be able to assist.  Under section 85 of the Charities Act 2011, the Commission has the power to make orders where a person in control of property held on trust for a charity is unwilling to apply it properly for the purposes of the charity.  This does not appear to be a well-used provision outside of Charity Commission inquiries, but a well written request setting out all of the relevant facts and matters may persuade the Commission to help sort out matters.  If so, this could be a very cost-effective route.