OG117-10 Investigations Work - Other Matters in Relation to Using Section 46, 47, 52 and 76

Last reviewed:
31 October 2016
Last updated:
15 May 2017

Policy Statement/Overview

IMPORTANT NOTE

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  • The guidance has not undergone an extensive review at this stage; it will be reviewed and renumbered at a later date.
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Summary of the guidance

Casework Guidance

Please read the IMPORTANT NOTE on the front page 

OG117 D6 - 15 May 2017

OG117 D6 Other Matters in Relation to Using Section 46, 47, 52 and 76 Powers

 

1.  Other issues in relation to use of powers

This guidance looks at issues which concern the whole range of powers we use in the course of a statutory inquiry and enable us to:

  • discharge Orders that are no longer appropriate or in the interests of the charity concerned;
  • issue the correct penal notices on Orders and Directions in the event that they are to be enforced;
  • make timely reviews of Orders and which powers are subject to appeal at the Tribunal. 

 

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2.  Charities Act 2011 s.76(6)

Discharge of Orders

 

2.1 Using this power

Section 76(6) of the Charities Act requires the Commission to review any Order made under section 76(3)(a) and 76(3)(c) to (g) and discharge them if it is appropriate. This is because they are temporary and protective in nature.

Temporary protective Orders as outlined in OG117-7 and OG117-8 should usually be considered as part of the monthly case review process between the investigating officer and their manager and at any other time as is necessary as the statutory inquiry progresses, for example in the light of new evidence. However, the Commission's policy is that Orders must be specifically reviewed for the purposes of section 76(6) every six months.

The outcome of the formal review carried out under section 76(6) can be challenged both under our own Decision Review procedure and at the Tribunal, whether or not we decide to discharge the Order. Because of this, each time we review the Order under this section we must inform the person who is the subject of the Order and also the charity trustees or the charity (if a corporate body).

When we decide to discharge an Order under section 76(6) we do so by Order. That is because, whenever we make an Order that has to be reviewed under section 76(6), we reserve the power to ourselves to vary or discharge that Order by a further Order (relying on section 337(1) & (2). Section 76(6) itself does not authorise the making of an Order (and hence is not an Order to which section 86 applies. That said, a decision under section 76(6) can be challenged in the Tribunal (First Tier) Charity: hence a reason should always be given.

 

2.2 Decision points and Authorised Officer powers

Any review of temporary Orders needs to consider whether the Order being reviewed should continue or whether it should be discharged in whole or in part in light of the reasons for which it was made in the first place and taking into consideration any new information that has come to light.

If the Order is to be discharged, the case officer should consider whether any savings or transitional provisions that should be included in the discharge Order.  

The person authorising and signing the discharge Order can be an Investigator, Senior Investigator or Head of Unit. Whoever signs the Order must ensure that its content properly represents what has been authorised.

 

2.3 Key issues

  • The Discharging Order does not need to recite the provisions of the original Order, but it does need to make it clear precisely which Order is being discharged. The unique Order number and date is sufficient identification, but an accompanying letter enclosing a copy of the original Order can be sent if necessary.
  • Only Orders with some continuing effect need to be discharged. This requirement covers Orders which:
    • suspend charity trustees, trustees, agents , officers or employees (but where the suspension Order is superceded by a removal Order, the suspension Order simply ceases to have effect and so does not need to be discharged) ;
    • vest property in the Official Custodian (or instruct others to do so);
    • prevent those who hold charity property from parting with it;
    • prevent debtors from making any payment to the charity towards the discharge of their debts;
    • restrict the transactions which may be entered into; and
    • appoint interim managers. 
  • A Discharge Order can be made to discharge part of an original Order, leaving some provisions in force as appropriate.
  • A written record of reviews must be made and retained on the case file.  It is important to record all decisions taken during the review and the reasons for such decisions.
  • The outcome of a section 76(6) review can be challenged under our Decision Review procedures. The limits placed by section 337 of the Act on reviews of Orders do not apply to Orders which can be reviewed under section 76(6).
  • We will notify the subject of the Order and the trustees each time we undertake a review under section 76(6).

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3.  Penal notices

Previously, to use a protective power under s.76(3) of the Charities Act 2011, the Commission had to be satisfied that there had been misconduct or mismanagement in the administration of the charity, or that it was necessary/ desirable to act to protect the charity's property/ secure a proper application of the property.

Now, as a result of s.2.2 of the Charities (Protection and Social Investment) Act 2016, failure to comply with a Commission Order or Direction, or failure to remedy any breach specified in a warning under s.75A may in itself be regarded as misconduct and/ or mismanagement and so allow the Commission to use these s.76(3) powers. In effect, this means that the gateway to s.76(3) is now enlarged.

Directions and Orders made under section 47 and section 52, and any Order under section 76 requiring transfer of property or payment to be called for or made, are enforced through the civil court.

Non-compliance with these Orders is treated as disobedience of a High Court Order and amounts to a contempt of court.

The court has extensive powers to deal with contempt and can impose fines and/or periods of imprisonment. It is, therefore, important that a penal notice is shown clearly on the face of such Orders or Directions that require them. This means that the penal notice must be displayed prominently on the first page of the Direction or Order. The form of words must be exactly as required by the rules of court.

Separately, failure to comply in full and within the deadline with any Order or Direction of the Commission, without good reasons, in itself is likely to be taken as evidence of misconduct and/ or mismanagement in the administration of the charity. This can also be used as grounds for taking further regulatory action and we may refer to it in the Statement of Results of Inquiry to be published at the end of the investigation. 

When issuing orders and/or directions equality and diversity must be considered. Caseworkers should offer to translate documents into another language, another format, e.g. Braille or Audio or to meet any other requirements needed.

Order and Directions to individuals and companies

Where the effect of an Order or Direction is to restrain a party from undertaking an act or requires an act to be carried out the penal notice must say:

If you the within-named [               ] do not comply with this [Order] [Direction] you may be held to be in contempt of Court and may be imprisoned or fined or {[in the case of a company or corporation] your assets may be seized}.

To enforce an Order or Direction, the breach of which may be imprisonment, it must normally be served personally on an individual. We must keep a written record of how, when and where the Order or Direction was served. Where served by a process server we require an affidavit as proof of service.

Service on a company can normally be effected by first class recorded delivery post to the registered office.

Service of such Orders and Directions on individual directors of companies must be made personally as they are in respect of individuals.

Enforcement of other Orders under section 76 of the Charities Act

Disobedience of any Order under

Section 76(3)(d) – not to part with property;

Section 76(3)(e) – debtor not to make payment; or

Section 76(3)(f) – restricting transactions;

is an offence and the individual can be punished by a fine on summary conviction (ie in the Magistrates Court).

Such Orders must prominently show the following notice:

If you the within-named [               ] contravene this Order you will be guilty of an offence and may be liable on summary conviction to a fine.

In the event that any Order or Direction is not complied with a caseworker should consult their Head of Unit to consider if legal advice should be taken on enforcement of the Order or Direction through the courts or whether other alternative action should be taken.

Irrespective of any action through the courts non-compliance with an Order of the Commission by a trustee may also be regarded as evidence of misconduct and/or mismanagement in the administration of the charity.

Other offences

Any person who acts as a trustee while disqualified commits an offence under section 183 of the Act and on summary conviction, or conviction on indictment (ie in the Crown Court) may be fined and/or imprisoned.

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4.  Complaints and Decision Reviews

The Commission has both a complaints and a decision review procedure that can be used. These deal with two distinct types of request and are explained on our website.

What is a complaint?

A complaint is an expression of dissatisfaction with our standards of service, actions or lack of actions. It is dissatisfaction with the way we have done things or failed to do things rather than being dissatisfied with an actual decision the Commission has made (although those complaining may also express dissatisfaction with those too).

What is a Decision Review?

A decision review is a formal request for us to look again or review a decision that we have made as distinct from our actions in making and implementing that decision. It can happen only once the Order or Scheme has been made and it is important to understand that a decision review is not the same as an appeal to the Tribunal. Those requesting a decision review on Orders or a Scheme made under sections 76, 83, 84 and 85 of the Act will have recourse to a Tribunal appeals procedure as well. Our practice is to accept a request for a decision review within 3 months of the making of the decision. Advice about decision review and appeals to the Tribunal can be found on our website and OG 736.

Where an application is received asking for an appeal to the Tribunal we will take the opportunity to review the decision to make the Order (whether or not there has been an application for a decision review). We will either uphold our original decision or otherwise discharge the Order, in whole or in part.

In reviewing some Orders we are limited in the scope of that review by section 337(4) of the Act, this is explained below.

Scope for review of Orders and Schemes under sections 76

Section 76(6) provides the power to review the following Orders at such intervals as the Commission sees fit.

If we are asked for a formal decision review or become aware of an appeal to the Tribunal of an Order which is reviewable under section 76(6) this would normally trigger us to look immediately at the decision using section 76(6).

Following the section 76(6) review if we decide to discharge an Order we will usually need to do so by issuing a further Order. This is because whenever we make an Order that has to be reviewed under section 76(6) we reserve to ourselves the power to vary or discharge the original Order by a further Order (under section 337(1)&(2) as section 76(6) itself does not authorise the making of an Order).

There are no limiting factors on reviewing and discharging the following Orders:

  • S76(3)(a)   – suspension of any trustee, charity trustee, officer, agent or employee;
  • S76()(c)     – vesting property or requiring others to vest property in the Official Custodian;
  • S76(3)(d)   – ordering any person or any trustee not to part with property without Commission approval;
  • S76(3)(e)   – ordering a debtor not to make payment without Commission approval;
  • S76(3)(f)    – restricting transactions that may be entered into without Commission approval;
  • S76(3)(g)   – order the appointment of a receiver and manager for the charity;

Other Orders that we would usually review as part of good case working practice, although not under section 76(6), are

  • S83 – suspending or removing trustees etc from membership of a charity;
  • S84 – giving specific directions for protection of charity;
  • S85 – directing application of charity property.

The nature of these Orders requires that some form of continuing action or scrutiny is needed on our part to ensure compliance. The extent of any review to consider the discharge of these Orders would be subject to the criteria set out below for reviews under section 337(4). Section 337(6) would give us the power to vary or discharge any of the provisions within these Orders by a subsequent Order, if needed.

Again, if a request for a decision review or an appeal to the Tribunal is made we would normally use this as a trigger to ensure we review whether we are satisfied the Order should still stand (irrespective of whether the case review was due).

Orders made under section 83 to suspend from membership are looked at in tandem with those made under 76(3)(a) to suspend from trusteeship, employment or office. If the section 76(3)(a) Order is discharged or is no longer effective then the section 83 Order falls automatically as it cannot stand alone – see OG117-7.

Limitations applying to other Orders and Schemes made under s18

Orders made under the following powers are subject to limitations for review:

  • S76(3)(b) – appointment of additional trustees;
  • S79(2)(a) – removal of any trustee, charity trustee, officer, agent or employee;
  • S79(2)(b) – establishment of a Scheme for the administration of the charity;
  • S80(1)     – removal of a charity trustee by the Commission's own motion;
  • S80(2)     – appointment of a charity trustee by the Commission's own motion.

The limitations for review of such cases are set out in section 337 of the Charities Act We can only consider setting aside these Orders or Schemes if, within 12 months of making it, there is evidence that we made it:

  • by mistake;
  • on misrepresentation; or
  • otherwise than in conformity with the 2011 Act.

We can undertake a review at any time within 12 months of the Order or Scheme being made if we think that there is prima facie evidence that one or more of these criteria have been met. This evidence may come from the trustees or other parties in the form of a request for decision review or appeal to the Tribunal.

The decision review will be confined to whether one or more of the section 337 criteria have been met, and if so, whether the reviewer is satisfied it would be in the interests of the charity for us to exercise our discretion to discharge the Order. It is not for the reviewer to substitute his or her judgement over the content of the Scheme or Order. These Orders may still be appealed to the Tribunal providing that the appeal is made within 42 days from the notification of the Order being made.

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