Gates Foundation Partners With The Clinton Foundation In Child Welfare Trust Fund Fraud
Learn more: BEVERLY TRAN: Gates Foundation Partners With The Clinton Foundation In Child Welfare Trust Fund Fraud http://beverlytran.blogspot.com/2017/09/gates-foundation-partners-with-clinton.html#ixzz5KxOIGhLt
Stop Medicaid Fraud in Child Welfare Gates Foundation Partners With The Clinton Foundation In Child Welfare Trust Fund Fraud
Now, that the majority of you reading this did not take the time to read the background I have provided, this is the part of the post where I provide a synoptical overview.
They were stealin'.
The Children's Investment Fund Foundation is the world's largest philanthropy that focuses specifically on improving children's lives.
Christopher Hohn is ranked by Forbes as the 9th wealthiest hedge fund manager in the world at a net worth of $3 billion dollars.
Having a net worth of $3 billion dollars does not sound very philanthropic for improving the lives of children, to me, considering the fact that children's lives are getting worse with the trafficking of tiny humans through the global children's trust funds he manages:
- UNICEF
- Clinton Foundation (or whatever name it is using at the time of corporate shape shifting)
- The Bill & Melinda Gates Foundation
- NewsCorp (FOX)
- Comcast
- Altaba
- Microsoft
- The British Crown
- Holy See
- Vatican Bank
- Children's Defense Funds
- States Children's Trust Funds
These are just a few of the children's trust funds he manages, where, the majority of the investments are in real estate through its child, TCI Fund Holding Limited, because The Children's Investment Fund has parental rights.
The Firm’s immediate parent is TCI Fund Management (UK) Limited (‘TCI LTD’), its intermediate parent is TCI Fund Holdings Limited and the ultimate parent is The Children’s Investment Fund Management (Cayman) Ltd (none of which are regulated). The first two are UK companies, while the ultimate parent is a Cayman Islands company.
On a side note, Bill Clinton, Inc. is also in the Cayman Islands, which is intrinsically also the parent of the Detroit Land Bank Authority, well, not the ultimate corporate parent because it never incorporated...you know the story.
Well, my question is this, "How come money that is supposed to be for the best interests of the child being transferred to his ex-wife in a divorce settlement?"
Wait, I have a better question: "How come the Holy See is using money that it gained through false claims of fraudulent child welfare programs, such as Medicaid, to traffic tiny humans through foster care and adoption, around the world, through forced migration, to invest in complex and highly sophisticated real estate fraud schemes, through christian NGOs that allow children to be Legally Kidnapped, used as lab rats in human subject research testing of biomedical experiments of pharmaceutical corporations, where the identities and legacies of the children are being snatched through asset forfeiture policies, to be financially leveraged in frauds to pilfer the national treasuries, like TARP, just to name one?
The representative of the United States said human trafficking was the modern day form of slavery. It used many of the same tools -- kidnappings, fraud, threats and beatings -- applied in earlier centuries to force men, women and children into labour and sexual exploitation. Human trafficking was a borderless crime and about 800,000 persons were trafficked globally. Millions were traded within their own countries and the crime occurred in virtually every country in the world, including the United States.
As I have previously brought to the attention of all those smarty pants people held up in that hermetically sealed ivory tower, "How the heck do you think they got so many slaves on those ships? They were kids! Low cost because they do not eat that much and high profit where you can get them pregnant to maximize revenues at the auctions."
I know that was a bit long winded, but, nobody cares about children, as long as it makes money, right?
It takes a village, then it pilfers its treasures....to fund campaigns.
Court of Appeal overturns ruling forcing £280m divorce payment to charity
The Court of Appeal has overturned a ruling forcing a trustee of the Children's Investment Fund Foundation to authorise a £280m payment to another charity.
 |
| Jamie Cooper & Chris Hohn, Privateers of The Children's Investment Fund Foundation |
Hohn and Cooper were both trustees of the charity, creating conflicts in its administration. A settlement agreed as part of the divorce said that Cooper would resign from the charity, and that CIFF must give £280m to charity Big Win Philanthropy, which is run by Cooper.
CIFF had agreed to make the grant to BWP provided that approval was obtained from either the Charity Commission or the courts. The Commission recommended that the decision should be made by the courts.
The members consist of Hohn, Cooper, and a third party - another of the charity's trustees - Dr Marko Lehtimaki. As a result of being the only party with no conflict of interest, Lehtimaki became part of the court proceedings and the only voting member of CIFF.
A judgment made on 6 June allowed the grant to go ahead, and ordered Lehtimaki should approve the grant, however he brought the case to the Court of Appeal, and last week’s decision could stop this grant from being made.
The Court of Appeal judgment was won by Lehtimaki, with the court allowing the appeal. They have struck down the order that Lehtimaki must approve the payment, with it now up to Lehtimaki to decide whether to do so.
The Court of Appeal judgment could be appealed again, up to the Supreme Court.
Implications on charities with members
Chris Willis Pickup, a partner at Taylor Vinters, said that the decision could have implications on charity law, and on how charities with members operate.
He said that the key legal issue is whether members of charitable companies owe fiduciaries duties, and therefore must act in the best interest for the charities. Trustees and members of CIOs do, but this case raises a question of whether members of charitable companies do. Willis Pickup said that the High Court judgment said they did, and the Court of Appeal has agreed with that.
But the ruling said that it “does not necessarily follow that members of charities such as the National Trust also have fiduciary obligations”.
'Charity lawyers need to update textbooks'
Willis Pickup said: “This is an important judgment for charity law, and to an extent for charities too. Although the Court of Appeal has allowed the appeal, it agreed with the High Court that this charitable company’s members have duties to act in the best interests of their charity.
“This is a major step for charity law, and matches the law for members of Charitable Incorporated Organisations. Although charity lawyers will need to update their textbooks, the judgment isn’t as dramatic for charities as some feared.
“The Court of Appeal sidestepped the question of whether this would apply to large membership charities such as the National Trust. Many charities already have codes of conduct for members that ask for good behaviour, but this judgment could give charities an extra lever for difficult discussions with charities. We’ll wait to see if there’s a further appeal to the Supreme Court.”
A spokeswoman for CIFF said that the charity had no comment at this time, and would await the eventual judgment.
- See more at: https://www.civilsociety.co.uk/news/court-of-appeal-rules-against-280m-divorce-payment-to-charity.html#sthash.s5fYHIjr.dpufON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Sir Geoffrey Vos, Chancellor of the High Court
| Royal Courts of Justice Strand, London, WC2A 2LL | ||
| 06/07/2018 |
LADY JUSTICE GLOSTER
(Vice-President of the Court of Appeal, Civil Division)
LORD JUSTICE DAVID RICHARDS
and
LORD JUSTICE NEWEY
____________________
Between:
| DR MARKO LEHTIMÄKI | Appellant | |
| - and - | ||
| (1) THE CHILDREN'S INVESTMENT FUND FOUNDATION (UK) (2) H.M. ATTORNEY GENERAL (3) SIR CHRISTOPHER HOHN (4) JAMIE COOPER | Respondents |
Mr Guy Morpuss QC (instructed by Macfarlanes LLP) for the Appellant
Mr William Henderson (instructed by Linklaters LLP) for the First Respondent
Mr Mark Mullen (instructed by the Government Legal Department) for the Second Respondent
Mr Robert Ham QC (instructed by Withers LLP) for the Third Respondent
Lord Pannick QC, Mr Simon Taube QC and Mr Edward Cumming QC (instructed by Bates Wells Braithwaite London LLP) for the Fourth Respondent
Hearing dates: 16-17 April 2018
____________________
HTML VERSION OF JUDGMENT ____________________
Crown Copyright ©
- Lady Justice Gloster (Vice-President of the Court of Appeal, Civil Division), Lord Justice David Richards and Lord Justice Newey:
- The origins of charity law long pre-date the recognition of companies limited by guarantee in the Companies Act 1862. Nowadays, however, many charities are companies limited by guarantee without a share capital. They include the claimant, The Children's Investment Fund Foundation (UK) ("CIFF").
Narrative
"the general purposes of such charitable bodies or for such other purposes for the benefit of the community as shall be exclusively charitable as the Trustees may from time to time determine".The memorandum also provides for CIFF to have power to co-operate with other bodies (clause 4.4), to support, administer or set up other charities (clause 4.5), to make grants (clause 4.13) and to do anything else within the law which promotes or helps to promote its objects (clause 4.27).
"in exceptional cases, other payments or benefits (but only with the written approval of the Commission [i.e. the Charity Commission for England and Wales] in advance)".The term "material benefit" is defined as "a benefit which may not be financial but has a monetary value".
"In a letter from [Ms Cooper's] solicitors to the trustees' solicitors dated 13 February 2015, [Ms Cooper] requested a grant from [CIFF] in an amount of $500m for the purposes of enabling her to establish a new UK charitable foundation (the 'New Foundation'). In a letter from [the trustees' solicitors] to us dated 11 March 2015, the trustees responded to [Ms Cooper's] request by proposing a grant in the amount of $360m (the 'Proposed Grant') to the New Foundation …. [Ms Cooper] now accepts that $360m is the appropriate amount for the Proposed Grant from [CIFF] and [Sir Christopher] has agreed to support the application before the Board of [CIFF], and in the board's application for approval to the Charity Commission or any tribunal or court that may have jurisdiction. For the avoidance of doubt such support shall not require any active steps to be taken by [Sir Christopher] beyond confirming the same in writing in the form of Appendix 1 when required to do so ….
Because both of [Ms Cooper] and [Sir Christopher], as trustees of [CIFF], have a conflict of interest, neither will vote on the Proposed Grant.
After the Board's approval of the Proposed Grant … and its submission to the Charity Commission, [Ms Cooper] will forthwith recuse herself from all involvement with [CIFF], whether as a member, trustee or otherwise, save to pursue payment of the Proposed Grant through the Charity Commission, relevant tribunal or court, which recusal will remain in place pending her resignation as a trustee and member of [CIFF]. … [Sir Christopher] will take no steps, directly or indirectly, through a third party or otherwise, to indicate that he is in opposition to the Proposed Grant. [Ms Cooper] will resign as a trustee and member of [CIFF] with immediate and permanent effect on the determination in respect of the Proposed Grant by the Charity Commission / tribunal / court as the case may be, and for the avoidance of doubt, this will occur whether the Proposed Grant has been approved by such body or not."
"As soon as reasonably practicable after [Ms Cooper's] resignation as member and trustee of [CIFF], and regardless of the outcome of the Proposed Grant to the New Foundation, [Sir Christopher] shall arrange for the New Foundation to benefit from a further $40m by reason of a contribution from monies which he or an entity he controls would otherwise be entitled to. As soon as reasonably practicable after the making of the Proposed Grant to the New Foundation (and only in the event the Proposed Grant is made) and after [Sir Christopher] arranges for the New Foundation to benefit from a further contribution of $40m [Ms Cooper] shall also arrange for the New Foundation to benefit from a further $40m by reason of a contribution from her personal funds or from monies which she or an entity she controls would otherwise be entitled to."
"i) Is this a case in which the trustees seek the court's approval to a momentous decision they have, in their discretion, decided to take, or a case in which they have surrendered their discretion to the court?
ii) Would the Grant confer a material benefit, whether directly or indirectly, on Ms Cooper within the proper meaning of clause 5.2 of CIFF's Memorandum of Association, so as to require the written approval of the [Charity] Commission in advance?
iii) Would the Grant be a payment for loss of office within the meaning of section 215 of the Companies Act 2006 so as to require the approval of CIFF's members under section 217 of the Companies Act 2006, because it would be (a) consideration for or in connection with Ms Cooper's retirement from her office as a trustee of CIFF, and either (b) a payment to a person connected with Ms Cooper, or (c) a payment to any person at the direction of, or for the benefit of, Ms Cooper or a person connected with her?
iv) If the Grant does require the approval of CIFF's members under section 217, are either or both of Sir Christopher and Ms Cooper (a) deprived of the right to vote because they owe fiduciary duties as members of CIFF and have a conflict of interest, (b) contractually deprived of the right to vote, and/or (c) contractually or otherwise obliged to vote in a particular way?
v) In any event, if the court approves the making of the Grant, does that abrogate the need for either (a) the Commission's written approval either under clause 5.2.5 of CIFF's Memorandum of Association and/or under section 201 of the Charities Act 2011, or (b) a members' resolution under section 217 of the Companies Act 2006?
vi) What factors should the court take into account in deciding whether to approve the making of the Grant, and in particular what weight should the court attach to the risk of tax being payable on the making of it?
vii) Should the court approve the making of the Grant?"
"(1) In the case of a charitable company, each of the following is ineffective without the prior written consent of the Commission—
(a) any approval given by the members of the company under any provision of Chapter 4 of Part 10 of the Companies Act 2006 (transactions with directors requiring approval by members) listed in subsection (2) ….
(2) The provisions of the 2006 Act are—
…
(f) section 217 (payments to directors for loss of office) …."
"i) This is a case in which the trustees of CIFF have, in the circumstances that have occurred, surrendered to the court their discretion in relation to the making of the Grant.
ii) The making of the Grant would confer a material benefit on Ms Cooper within the proper meaning of clause 5.2 of the Memorandum, so as to require the written approval of the Commission in advance.
iii) The making of the Grant will be a payment for loss of office within the meaning of section 215 of the Companies Act 2006 so as to require the approval of CIFF's members under section 217 of the Companies Act 2006, because it would be a payment made as consideration for and in connection with Ms Cooper's retirement from her office as a trustee of CIFF, and a payment to BWP, a person connected with Ms Cooper.
iv) Sir Christopher and Ms Cooper are deprived of the right to vote on a section 217 resolution as to the making of the Grant because they are contractually obliged not to do so.
v) The Grant is and will be in the best interests of CIFF primarily because it would be inappropriate to allow any of these parties to renege on the April and July agreements unless there were strong reasons requiring the court to do so in the interests of CIFF and charity. No such reasons exist. The April and July agreements will allow a further US$40 million to be secured for charitable purposes, and will allow Ms Cooper to devote her considerable talents to a charity with increased assets. The making of the Grant will bring a conclusion to this dispute and the governance problems that it has created for CIFF, and will avoid further legal and other expenses being incurred, and allow the protagonists to return to devoting their efforts and talents to charity.
vi) Subject to the consent of the Commission under section 201 of the Charities Act 2011 and under clause 5.2 of the Memorandum, the making of the Grant must be approved by the members of CIFF, of whom only Dr Lehtimaki is entitled to vote. Dr Lehtimaki will be directed by the court to vote in favour of any resolution of the members of CIFF approving the Grant under section 217 of the Companies Act 2006."
"128 I would like also to record that I have not found the decision with which the court is faced an entirely straightforward one. Whilst pragmatically making the Grant would be more likely to resolve CIFF's managerial issues than not making it, it is not entirely clear why disposing of assets of US$360 million should be regarded as being in the best interests of CIFF. That said, I have resolved, perhaps counter-intuitively, that in the unique circumstances of what is an extremely unusual case, making the Grant is and will be in the best interests of CIFF. My main, but not my only, reasons for reaching this decision can be briefly summarised as follows:-
i) The April and July agreements were entered into in good faith by Sir Christopher and Ms Cooper and by the independent trustees of CIFF. It would be inappropriate to allow any of these parties to renege on such a deal unless there were strong reasons requiring the court to do so in the interests of CIFF and charity. I deprecate Sir Christopher's implicit submission that, because as part of the deal Ms Cooper had already resigned as a trustee, the court should seek to take advantage of that situation by refusing the Grant on the basis that the governance problems were anyway resolved. I acknowledge, of course, that trustees and the court may be forced to take tough decisions, but I am not sure that much has changed as to the pros and cons of the Grant in the time that has elapsed since April 2015.
ii) The April and July agreements, if carried into effect, will allow a further US$40 million to be secured for charitable purposes, and will enhance the value of the assets that will benefit from Ms Cooper's considerable talents as a charity manager in this field.
iii) The making of the Grant will, in fact, if this judgment is carried out, bring a conclusion to this incredibly hostile dispute and the governance problems that it has created for CIFF. It may be hoped that it will avoid further legal and other expenses being incurred, and equally importantly, allow the protagonists to return to devoting their efforts and talents to the charities they have founded and to which they have so much to offer. It may be that there will be some additional costs incurred as a result of the grant being made as Dr Lehtimaki suggests, but I doubt they come anywhere near equating with the costs and disruptive effect of further litigation.
129 In stating these as my main reasons, I have taken into account the entirely compliant structure and objects of BWP and the likelihood that the Grant will be well and responsibly used for the benefit of charity if it is made.
130 I have considered the negative features of making the Grant, but do not consider that they outweigh the massive advantages of the factors I have mentioned. I acknowledge the unprecedented nature of the Grant for CIFF and also for charity generally, and the supposedly bad precedent that it sets. But it seems to me that exceptional situations demand exceptional solutions. I have had, in the course of this case, no basis to question the independence of mind of the independent trustees that reached the original decision to allow the Grant to go forward. I respect their good faith in adopting the solution that the Grant provides. I have also paid very careful attention to the independent submissions of the Attorney General supporting the Grant. It is his sole duty in this regard to protect the interests of charity. In my judgment, his approach in this case was entirely correct and appropriate. I do not accept that the making of the Grant will give rise to reputational damage for either CIFF or the charitable sector more broadly. It will draw a line under an unfortunate dispute."
"154 Leaving pragmatic grounds aside, the legal basis for my decision is, in my judgment, to be found in the particular circumstances of this case. Here, both the Commission and the trustees of CIFF have decided that their discretion to approve the Grant should be exercised by the court. That discretion has now been exercised. The discretion so exercised binds the charity and the charitable company, CIFF. Its management is only divided between trustees and members for specific purposes. Here the trustees of CIFF bound CIFF in relinquishing their discretion to the court, and the court order will bind CIFF in deciding that the Grant should be made. That means that, whilst the members must pass a resolution under section 217 to approve the Grant, it is not in this case open to any member of CIFF to vote against that resolution, once the court and the Commission have approved the Grant. The member does not have a free vote in this case because he is bound by the fiduciary duties I have described and is subject to the court's inherent jurisdiction over the administration of charities. When the court has decided what is expressly in the best interests of a charity, a member would not be acting in the best interests of that charity if he gainsaid that decision. It is not a case of evaluating where on any scale the court's approval is located. The court has approved the Grant as being in the best interests of CIFF and charity in the exercise of its discretion and its decision must be respected. Moreover, the Commission has expressly approved the application to the court for an order under paragraph 10.2.7 of the Claim Form for '[s]uch … directions to the … Defendants or any of them, as the court shall think fit for the purpose of procuring (subject to the consent of the Charity Commission under s.201 Charities Act 2011) the passing of a resolution approving the payment of the Grant by the members of [CIFF] so as to satisfy the requirements of s.217 and/or s.218 Companies Act 2006 in relation to such payment'. The Commission, therefore, contemplated that the court might make directions aimed at procuring the passing of any necessary section 217 resolution. For these reasons, I would propose to make such an order directing Dr Lehtimaki to vote in favour of the resolution to approve the Grant.
155 I should not leave this aspect of the matter without emphasising the specific nature of the decision I have reached, and the exceptional character of this case. I have looked at numerous charities' cases over three centuries and the present position has not arisen before. It may never arise again. The position might be different if there were numerous independent members of the company, or if the trustees of CIFF had not relinquished their discretion to the court. But here, the Commission and CIFF asked the court to decide and it has done so. The court is not overriding the provisions of the Companies Act 2006. It is simply determining that in the circumstances of this case, the interests of CIFF and of charity demand that the Grant is approved. For that reason, the only remaining voting member of CIFF must be directed to approve it, otherwise the essential interests of charity which the court is there to protect would be put at risk."
i) In paragraph 135 of his judgment, that he was:The parties' positions in outline
"not saying that no reasonable trustee or fiduciary could disagree with my view, nor could I bearing in mind the way the matter was argued; nor, for the avoidance of doubt, am I saying that anyone who disagreed with my view would automatically be acting in bad faith"; andii) In paragraph 150 of his judgment, that he took the view that the Charity Commission "should be given its statutory opportunity in the light of this judgment to consider whether to approve the making of a members' resolution under section 217 of the Companies Act".
i) Is Dr Lehtimäki subject to any (and, if so, what) fiduciary duties ("the Fiduciary Duties Issue")?
ii) Is the Court's inherent jurisdiction in relation to charities extensive enough to allow it to order a member to exercise a discretion in a particular way regardless of whether there is evidence of breach of duty on the part of the member ("the Inherent Jurisdiction Issue")?
iii) In the light of the answers to the previous questions, was the Chancellor entitled, on the facts of the present case, to direct Dr Lehtimäki to vote for a resolution under section 217 of the Companies Act 2006 approving the payment of the Grant ("the Present Case Issue")?
The Fiduciary Duties Issue
"First, the position held by each of them exists, not for his own, but for another's benefit – in the case of the director, for example, for the company; in the case of the trustee in bankruptcy, for the creditors. Secondly, the duties imposed on, and the powers exercised by, each have a source other than in an agreement between him and the person(s) for whose benefit he is required to act – with the receiver, for example, they stem from the order of the court; with the executor, from the will, legislation and the general law. Thirdly, as a general rule, each alone is ultimately responsible for determining how those duties are to be discharged, how those powers are to be exercised."In the present case, Mr Morpuss submitted, none of these characteristics exists. That there is no general obligation on members of a charitable company to act in the interests of the charity rather than his own is confirmed, Mr Morpuss suggested, by the fact that the Charity Commission recognises that people sometimes become members of a charity with a view to "tangible benefits, for example reduced admission fees to historical sites or particular areas" and "many members are involved primarily in order to gain access to information" (see "RS7 - Membership Charities", at 17). With regard to the second characteristic, Mr Morpuss contended that the relationship between a charitable company and its members "is not imposed upon the charity", but is "one created by the charity itself, and regulated by the charity's own rules and constitution". As for the final (and "decisive" – see paragraph 25 of "Fiduciary Obligations") characteristic, members have, Mr Morpuss observed, very limited powers, and the Charity Commission is always there in the background, with the consequence that "[n]one of the members' rights can freely be exercised so as to necessitate the intervention of Equity".
"The argument for the defendant was that the subscriber to a charity is under an obligation to give his votes for the best object, and that the plaintiff, if he gave his votes at the first election to what he thought the best candidate, incurred neither trouble nor prejudice, so that there was in that point of view no consideration; and if he gave his votes to the candidate whom he did not think the best, the whole agreement was void as against public policy.
But though some of us, at least, much disapprove of this kind of traffic, we can find no legal principle to justify us in holding that the subscriber to a charity may not give his votes as he pleases, answering only to his own conscience and reputation for the way he exercises his power."
"while there is no generally agreed and unexceptionable definition, the following description suffices for present purposes: a person will be in a fiduciary relationship with another when and insofar as that person has undertaken to perform such a function for, or has assumed such a responsibility to, another as would thereby reasonably entitle that other to expect that he or she will act in that other's interest to the exclusion of his or her own or a third party's interest".Writing extra-judicially, Finn J drew attention to the relevance of asking "for what purpose one party has acquired rights, powers and duties in the relationship: to promote his own interests, the joint interest, or the interests of the other party alone", noting that the latter two indicate a fiduciary relationship (see "The Fiduciary Principle", in "Equity, Fiduciaries and Trusts", ed. T.G. Youdan, 1989).
"The ordinary power of appointing new trustees, under a settlement such as this is, of course imposes upon the person who has the power of appointment the duty of selecting honest and good persons who can be trusted with the very difficult, onerous, and often delicate duties which trustees have to perform. He is bound to select to the best of his ability the best people he can find for the purpose. Is that power of selection a fiduciary power or not? I will try it in this way, which I offered as a test in the course of the argument. Suppose, as happens not unfrequently, that trustees, under the terms of the deed of trust, are entitled to remuneration by way of annual salary or payment. Could the person who has the power of appointment put the office of trustee up for sale, and sell it to the best bidder? It is clear that would be entirely improper. Could he take any remuneration for making the appointment? In my opinion, certainly not. Why not? The answer is that he cannot exercise the power for his own benefit. Why not again? The answer is inevitable. Because it is a power which involves a duty of a fiduciary nature; and I therefore come to the conclusion, independently of any authority, that the power is a fiduciary power."
"But, if I ask how any court of equity would regard this power, it seems to me that the only answer must be that it is a fiduciary power to be exercised with a single eye to the benefit of the beneficiaries. Let me suppose that the authorised persons, who may for this purpose be either the Vestey brothers or those who later answer that description (since the character of the power will not vary with those who exercise it) direct the trustees to invest the trust funds by way of loan to themselves at a low rate of interest without security, and that the trustees, regarding such an investment as very precarious, apply to the court and ask whether they must comply with the direction. In such a case it would, as it appears to me, be an irrelevant plea by the authorised persons that the right to direct investment was merely a part of a scheme for avoiding liability to income tax. The court could see nothing but a settlement with a wide power of investment of the trust funds and a mandate to the trustees to invest at the direction of certain persons. Nothing short of the most direct and express words would, I think, justify a construction which would enable those who exercised the power of direction to disregard the interests of the beneficiaries."In a similar vein, Lord Morton concluded (at 1132):
"The result is that, in my view, on the true construction of the trust deed, the power of direction is a fiduciary power, and the authorised persons are not entitled to use it for the purpose of obtaining a benefit for themselves. They must exercise it bona fide in what they consider to be the best interests of the beneficiaries."
"The power to remove trustees is vested in the committee, and although the settlor can fill vacancies or possibly appoint additional members of the committee even when there is no vacancy, that power, like the power to appoint new trustees, must I think be a fiduciary power. It could not properly be used to 'pack' the committee to ensure that the settlor has a majority which will follow his directions. Similarly, the committee's power to remove and his power to appoint new trustees are fiduciary powers."
"to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary?"In the present case, the Chancellor said that it was "not necessary … to decide in detail the nature and extent of the members' fiduciary duties", but (echoing the Charity Commission's "RS7 – Membership Charities") held that, "at least in the circumstances of this case, 'members [of CIFF] have an obligation to use their rights and exercise their vote in the best interests of the charity for which they are a member'" (paragraph 145 of the judgment). It would, the Chancellor considered, "be contrary to the whole regime established by the increasingly prescriptive legislative regime reflected in the Charities Act 2011 if the member of a company such as CIFF could vote in his own interests or in a manner detrimental to the charitable objects of the company" (paragraph 145 of the judgment).
The Inherent Jurisdiction Issue
"in such cases as I have mentioned it is to the discretion of the trustees that the execution of the trust is confided, that discretion being exercised with an entire absence of indirect motive, with honesty of intention, and with a fair consideration of the subject. The duty of supervision on the part of this Court will thus be confined to the question of the honesty, integrity, and fairness with which the deliberation has been conducted, and will not be extended to the accuracy of the conclusion arrived at, except in particular cases".Again, in Tempest v Lord Camoys (1882) 21 Ch D 571 Jessel MR said (at 578):
"It is settled law that when a testator has given a pure discretion to trustees as to the exercise of a power, the Court does not enforce the exercise of the power against the wish of the trustees, but it does prevent them from exercising it improperly. The Court says that the power, if exercised at all, is to be properly exercised."
"Charities operate within a framework of public law, not private law. The Crown is parens patriae of the charity and the judges of the courts represent the Crown in supervising what the charity is doing and in giving directions …. The Attorney General's function is to make representations to the court as to where lies the public interest as he sees it."
"The court has always had a general jurisdiction in respect of enforcement of trusts, and in relation to trusts of property dedicated to a charitable purpose a special jurisdiction by way of scheme to amend defects in machinery and further to direct in proper cases a cy-près application of assets. But I do not think that the double aspect of the definition of 'charity proceedings' indicates that 'jurisdiction with respect to charities' must be restricted to such jurisdiction that is unconnected with the enforcement of trusts. Rather I should have said that it was to avoid argument on a plainly vexed question."Buckley LJ likewise did not consider "the court's jurisdiction with respect to charities" to be confined to its jurisdiction to approve schemes. He explained (at 186-187):
"It is a function of the Crown as parens patriae to ensure the due administration of established charities and the proper application of funds devoted to charitable purposes. This it normally does through the instrumentality of the courts, but this is not the only way in which the Crown can regulate charities or the application of charitable funds. Where a charity has been incorporated by Royal Charter, the Crown may amend its constitution or vary its permitted objects by granting a supplemental charter. Where funds are given for charitable purposes in circumstances in which no express or implied trust is created, the Crown can regulate the application of those funds by means of a scheme under the sign manual. Where the Crown invokes the assistance of the courts for such purposes, the jurisdiction which is invoked is, I think, a branch of the court's jurisdiction in relation to trusts. In such cases the relief granted often takes the form of an order approving a scheme for the administration of the charity which has been laid before the court, but this is not the only way in which the court can exercise jurisdiction in respect of a charity or over charity trustees. The approval of a scheme of this nature is, so far as I am aware, a form of relief peculiar to charities, but it does not constitute relief of a kind given in the exercise of a jurisdiction confined to giving relief of that sort. The court could, for instance, restrain trustees from applying charitable funds in breach of trust by means of an injunction. In the case of a charity incorporated by statute this might, as was suggested in the present case, be explained as an application of the doctrine of ultra vires, but I do not think that this would be a satisfactory explanation, for a similar order upon unincorporated trustees could not be so explained. Or, by way of further example, the court could order charity trustees to make good trust funds which they had misapplied, or could order them to account, or could remove or appoint trustees, or could exercise any other kind of jurisdiction available in the execution of trusts other than charitable trusts. In every such case the court would be acting upon the basis that the property affected is not in the beneficial ownership of the persons or body in whom its legal ownership is vested but is devoted to charitable purposes, that is to say, is held upon charitable trusts. Any relief of this kind is, in my judgment, appropriately described as relief granted in the exercise of the court's jurisdiction with respect to charities, and, where the relief is such as to bind the body of trustees as a whole, this would, in my opinion, constitute control of the charity by the court in the exercise of its jurisdiction with respect to charities. I consequently feel unable to accept the suggestion put forward on behalf of the Attorney-General that the reference in section 45 of the Act of 1960 to the court's jurisdiction with respect to charities is in some way confined to its jurisdiction to approve charitable schemes."
"On the whole, I consider that the reference in the definition to the control of the court in the exercise of the stated jurisdiction is designed to point to a charitable institution in respect of which the court has power generally to supervise and direct the administration, to supply any defects in the regulations when such are revealed, to remove and appoint where necessary for the due administration of the institution trustees or governors, to make orders where necessary for that due administration as to vesting and otherwise of assets of the institution, and to make schemes for the cy-près application of assets in appropriate cases. In any given case it may be a question of degree whether an institution can fairly be said to be, within that jurisdiction, under the control of the court. But my conclusion is that an institution so closely under the control of the executive as is one of these training boards, with such minimal occasion for intervention by the court, is outside the statutory definition of 'charity.'"
"Although the beneficiaries cannot, in general, control the trustees while the trust remains in being, or commit them to a particular dealing with the trust property, they can, if sui juris and together entitled to the whole beneficial interest, put an end to the trust and direct the trustees to hand over the trust property as they direct; and this is so even if the trust deed contains express provisions for the determination of the trust."In the case of a charity, Lord Pannick said, the Attorney General represents the beneficial interest. Nonetheless, it is hard to see how the rule can apply in the case of a charity and, more specifically, there is no question of "put[ting] an end" to CIFF. The rule cannot, therefore, be applicable.
"But though this is such an authority coupled with an interest as would survive, yet it is so far a trust, that in case of misbehaviour the court may interpose, for it must be allowed, that the court has a particular free and extensive jurisdiction in the case of a charity, and not confined to the proper or formal methods of proceeding requisite in other cases."Given, however, the reference to "misbehaviour", the case does not assist on the extent of the Court's powers absent a breach of duty.
"This is all a matter of judgment for the trustees. There will be no one right answer. There will be one or more minimum benefits below which no reasonable trustees would go but subject to that, the level of provision and the method of its provision is properly a matter for them and not for the Charity Commission or the court …. It is not for the Charity Commission or the tribunal or the court to impose on trustees of a school their own idea of what is, and what is not, reasonable. The courts have never done that in the context of their supervision of trustees of private trusts and the same should apply to charities. There is nothing in the 2006 Act (including the duty to issue the guidance) which changes that position. But trustees are under the ultimate control of the courts. There is always a range of actions which they can take in a given situation. There is, of course, a limit outside which they must not step."
The Present Case Issue
"It would be remarkable if the High Court, having reached a reasoned and considered decision as to the desirability of the Grant in the best interests of CIFF, had to defer to the eccentric, if good faith, decision made by a single member when all other members were conflicted. I say eccentric, because Dr Lehtimaki has made it abundantly clear that he is motivated entirely by an economic approach and regards himself as only acting in the best interests of unspecified beneficiaries of the charity, rather than by the correct legal principles that I have stated. It is anyway in my judgment questionable whether Dr Lehtimaki would be acting on a proper basis if he rejected the court's reasoned decision as to the appropriate course for CIFF to adopt."
i) Although Sir Christopher was a very dear friend, he took his fiduciary duties seriously and would not allow his judgment to be impaired by personal factors;
ii) "The focus should always be on the best interests of CIFF's beneficiaries";
iii) The arguments for and against the Grant could be divided into "Direct factors" (comprising "The net effect on CIFF's charitable work" and "Solving the governance problem") and "Secondary factors" ("The overall impact on the UK charitable sector" and "The negative precedents of making the Grant");
iv) "I would reiterate that the only people I have a fiduciary duty towards are the intended recipients of CIFF's charitable work. While my reasoning is abstract, I find it useful to visualize the person to whom I am answerable for when taking decisions. To me, this is the HIV positive young woman with her HIV negative child I met in Mutare Hospital in Manicaland, Zimbabwe (whose husband was beating her up because taking the necessary medicines was an embarrassment for his family). I am not a 'soft' person, but with that image in mind, choices become much easier";
v) "Thus the only consideration to the Grant is whether it is a net benefit to the children in developing countries. If it is, then it should be paid. If it is not, then it should not be paid. It is that simple"; and
vi) The analyses that he had carried out made him think that it was "very difficult – on the currently available evidence – to decide whether the Grant is in the best interests of CIFF's beneficiaries".
Conclusion
CHANCERY DIVISION
Sir Geoffrey Vos, Chancellor of the High Court
| Royal Courts of Justice Strand, London, WC2A 2LL | ||
| 06/07/2018 |
LADY JUSTICE GLOSTER
(Vice-President of the Court of Appeal, Civil Division)
LORD JUSTICE DAVID RICHARDS
and
LORD JUSTICE NEWEY
____________________
Between:
| DR MARKO LEHTIMÄKI | Appellant | |
| - and - | ||
| (1) THE CHILDREN'S INVESTMENT FUND FOUNDATION (UK) (2) H.M. ATTORNEY GENERAL (3) SIR CHRISTOPHER HOHN (4) JAMIE COOPER | Respondents |
Mr Guy Morpuss QC (instructed by Macfarlanes LLP) for the Appellant
Mr William Henderson (instructed by Linklaters LLP) for the First Respondent
Mr Mark Mullen (instructed by the Government Legal Department) for the Second Respondent
Mr Robert Ham QC (instructed by Withers LLP) for the Third Respondent
Lord Pannick QC, Mr Simon Taube QC and Mr Edward Cumming QC (instructed by Bates Wells Braithwaite London LLP) for the Fourth Respondent
Hearing dates: 16-17 April 2018
____________________
HTML VERSION OF JUDGMENT ____________________
Crown Copyright ©
- Lady Justice Gloster (Vice-President of the Court of Appeal, Civil Division), Lord Justice David Richards and Lord Justice Newey:
- The origins of charity law long pre-date the recognition of companies limited by guarantee in the Companies Act 1862. Nowadays, however, many charities are companies limited by guarantee without a share capital. They include the claimant, The Children's Investment Fund Foundation (UK) ("CIFF").
Narrative
"the general purposes of such charitable bodies or for such other purposes for the benefit of the community as shall be exclusively charitable as the Trustees may from time to time determine".The memorandum also provides for CIFF to have power to co-operate with other bodies (clause 4.4), to support, administer or set up other charities (clause 4.5), to make grants (clause 4.13) and to do anything else within the law which promotes or helps to promote its objects (clause 4.27).
"in exceptional cases, other payments or benefits (but only with the written approval of the Commission [i.e. the Charity Commission for England and Wales] in advance)".The term "material benefit" is defined as "a benefit which may not be financial but has a monetary value".
"In a letter from [Ms Cooper's] solicitors to the trustees' solicitors dated 13 February 2015, [Ms Cooper] requested a grant from [CIFF] in an amount of $500m for the purposes of enabling her to establish a new UK charitable foundation (the 'New Foundation'). In a letter from [the trustees' solicitors] to us dated 11 March 2015, the trustees responded to [Ms Cooper's] request by proposing a grant in the amount of $360m (the 'Proposed Grant') to the New Foundation …. [Ms Cooper] now accepts that $360m is the appropriate amount for the Proposed Grant from [CIFF] and [Sir Christopher] has agreed to support the application before the Board of [CIFF], and in the board's application for approval to the Charity Commission or any tribunal or court that may have jurisdiction. For the avoidance of doubt such support shall not require any active steps to be taken by [Sir Christopher] beyond confirming the same in writing in the form of Appendix 1 when required to do so ….
Because both of [Ms Cooper] and [Sir Christopher], as trustees of [CIFF], have a conflict of interest, neither will vote on the Proposed Grant.
After the Board's approval of the Proposed Grant … and its submission to the Charity Commission, [Ms Cooper] will forthwith recuse herself from all involvement with [CIFF], whether as a member, trustee or otherwise, save to pursue payment of the Proposed Grant through the Charity Commission, relevant tribunal or court, which recusal will remain in place pending her resignation as a trustee and member of [CIFF]. … [Sir Christopher] will take no steps, directly or indirectly, through a third party or otherwise, to indicate that he is in opposition to the Proposed Grant. [Ms Cooper] will resign as a trustee and member of [CIFF] with immediate and permanent effect on the determination in respect of the Proposed Grant by the Charity Commission / tribunal / court as the case may be, and for the avoidance of doubt, this will occur whether the Proposed Grant has been approved by such body or not."
"As soon as reasonably practicable after [Ms Cooper's] resignation as member and trustee of [CIFF], and regardless of the outcome of the Proposed Grant to the New Foundation, [Sir Christopher] shall arrange for the New Foundation to benefit from a further $40m by reason of a contribution from monies which he or an entity he controls would otherwise be entitled to. As soon as reasonably practicable after the making of the Proposed Grant to the New Foundation (and only in the event the Proposed Grant is made) and after [Sir Christopher] arranges for the New Foundation to benefit from a further contribution of $40m [Ms Cooper] shall also arrange for the New Foundation to benefit from a further $40m by reason of a contribution from her personal funds or from monies which she or an entity she controls would otherwise be entitled to."
"i) Is this a case in which the trustees seek the court's approval to a momentous decision they have, in their discretion, decided to take, or a case in which they have surrendered their discretion to the court?
ii) Would the Grant confer a material benefit, whether directly or indirectly, on Ms Cooper within the proper meaning of clause 5.2 of CIFF's Memorandum of Association, so as to require the written approval of the [Charity] Commission in advance?
iii) Would the Grant be a payment for loss of office within the meaning of section 215 of the Companies Act 2006 so as to require the approval of CIFF's members under section 217 of the Companies Act 2006, because it would be (a) consideration for or in connection with Ms Cooper's retirement from her office as a trustee of CIFF, and either (b) a payment to a person connected with Ms Cooper, or (c) a payment to any person at the direction of, or for the benefit of, Ms Cooper or a person connected with her?
iv) If the Grant does require the approval of CIFF's members under section 217, are either or both of Sir Christopher and Ms Cooper (a) deprived of the right to vote because they owe fiduciary duties as members of CIFF and have a conflict of interest, (b) contractually deprived of the right to vote, and/or (c) contractually or otherwise obliged to vote in a particular way?
v) In any event, if the court approves the making of the Grant, does that abrogate the need for either (a) the Commission's written approval either under clause 5.2.5 of CIFF's Memorandum of Association and/or under section 201 of the Charities Act 2011, or (b) a members' resolution under section 217 of the Companies Act 2006?
vi) What factors should the court take into account in deciding whether to approve the making of the Grant, and in particular what weight should the court attach to the risk of tax being payable on the making of it?
vii) Should the court approve the making of the Grant?"
"(1) In the case of a charitable company, each of the following is ineffective without the prior written consent of the Commission—
(a) any approval given by the members of the company under any provision of Chapter 4 of Part 10 of the Companies Act 2006 (transactions with directors requiring approval by members) listed in subsection (2) ….
(2) The provisions of the 2006 Act are—
…
(f) section 217 (payments to directors for loss of office) …."
"i) This is a case in which the trustees of CIFF have, in the circumstances that have occurred, surrendered to the court their discretion in relation to the making of the Grant.
ii) The making of the Grant would confer a material benefit on Ms Cooper within the proper meaning of clause 5.2 of the Memorandum, so as to require the written approval of the Commission in advance.
iii) The making of the Grant will be a payment for loss of office within the meaning of section 215 of the Companies Act 2006 so as to require the approval of CIFF's members under section 217 of the Companies Act 2006, because it would be a payment made as consideration for and in connection with Ms Cooper's retirement from her office as a trustee of CIFF, and a payment to BWP, a person connected with Ms Cooper.
iv) Sir Christopher and Ms Cooper are deprived of the right to vote on a section 217 resolution as to the making of the Grant because they are contractually obliged not to do so.
v) The Grant is and will be in the best interests of CIFF primarily because it would be inappropriate to allow any of these parties to renege on the April and July agreements unless there were strong reasons requiring the court to do so in the interests of CIFF and charity. No such reasons exist. The April and July agreements will allow a further US$40 million to be secured for charitable purposes, and will allow Ms Cooper to devote her considerable talents to a charity with increased assets. The making of the Grant will bring a conclusion to this dispute and the governance problems that it has created for CIFF, and will avoid further legal and other expenses being incurred, and allow the protagonists to return to devoting their efforts and talents to charity.
vi) Subject to the consent of the Commission under section 201 of the Charities Act 2011 and under clause 5.2 of the Memorandum, the making of the Grant must be approved by the members of CIFF, of whom only Dr Lehtimaki is entitled to vote. Dr Lehtimaki will be directed by the court to vote in favour of any resolution of the members of CIFF approving the Grant under section 217 of the Companies Act 2006."
"128 I would like also to record that I have not found the decision with which the court is faced an entirely straightforward one. Whilst pragmatically making the Grant would be more likely to resolve CIFF's managerial issues than not making it, it is not entirely clear why disposing of assets of US$360 million should be regarded as being in the best interests of CIFF. That said, I have resolved, perhaps counter-intuitively, that in the unique circumstances of what is an extremely unusual case, making the Grant is and will be in the best interests of CIFF. My main, but not my only, reasons for reaching this decision can be briefly summarised as follows:-
i) The April and July agreements were entered into in good faith by Sir Christopher and Ms Cooper and by the independent trustees of CIFF. It would be inappropriate to allow any of these parties to renege on such a deal unless there were strong reasons requiring the court to do so in the interests of CIFF and charity. I deprecate Sir Christopher's implicit submission that, because as part of the deal Ms Cooper had already resigned as a trustee, the court should seek to take advantage of that situation by refusing the Grant on the basis that the governance problems were anyway resolved. I acknowledge, of course, that trustees and the court may be forced to take tough decisions, but I am not sure that much has changed as to the pros and cons of the Grant in the time that has elapsed since April 2015.
ii) The April and July agreements, if carried into effect, will allow a further US$40 million to be secured for charitable purposes, and will enhance the value of the assets that will benefit from Ms Cooper's considerable talents as a charity manager in this field.
iii) The making of the Grant will, in fact, if this judgment is carried out, bring a conclusion to this incredibly hostile dispute and the governance problems that it has created for CIFF. It may be hoped that it will avoid further legal and other expenses being incurred, and equally importantly, allow the protagonists to return to devoting their efforts and talents to the charities they have founded and to which they have so much to offer. It may be that there will be some additional costs incurred as a result of the grant being made as Dr Lehtimaki suggests, but I doubt they come anywhere near equating with the costs and disruptive effect of further litigation.
129 In stating these as my main reasons, I have taken into account the entirely compliant structure and objects of BWP and the likelihood that the Grant will be well and responsibly used for the benefit of charity if it is made.
130 I have considered the negative features of making the Grant, but do not consider that they outweigh the massive advantages of the factors I have mentioned. I acknowledge the unprecedented nature of the Grant for CIFF and also for charity generally, and the supposedly bad precedent that it sets. But it seems to me that exceptional situations demand exceptional solutions. I have had, in the course of this case, no basis to question the independence of mind of the independent trustees that reached the original decision to allow the Grant to go forward. I respect their good faith in adopting the solution that the Grant provides. I have also paid very careful attention to the independent submissions of the Attorney General supporting the Grant. It is his sole duty in this regard to protect the interests of charity. In my judgment, his approach in this case was entirely correct and appropriate. I do not accept that the making of the Grant will give rise to reputational damage for either CIFF or the charitable sector more broadly. It will draw a line under an unfortunate dispute."
"154 Leaving pragmatic grounds aside, the legal basis for my decision is, in my judgment, to be found in the particular circumstances of this case. Here, both the Commission and the trustees of CIFF have decided that their discretion to approve the Grant should be exercised by the court. That discretion has now been exercised. The discretion so exercised binds the charity and the charitable company, CIFF. Its management is only divided between trustees and members for specific purposes. Here the trustees of CIFF bound CIFF in relinquishing their discretion to the court, and the court order will bind CIFF in deciding that the Grant should be made. That means that, whilst the members must pass a resolution under section 217 to approve the Grant, it is not in this case open to any member of CIFF to vote against that resolution, once the court and the Commission have approved the Grant. The member does not have a free vote in this case because he is bound by the fiduciary duties I have described and is subject to the court's inherent jurisdiction over the administration of charities. When the court has decided what is expressly in the best interests of a charity, a member would not be acting in the best interests of that charity if he gainsaid that decision. It is not a case of evaluating where on any scale the court's approval is located. The court has approved the Grant as being in the best interests of CIFF and charity in the exercise of its discretion and its decision must be respected. Moreover, the Commission has expressly approved the application to the court for an order under paragraph 10.2.7 of the Claim Form for '[s]uch … directions to the … Defendants or any of them, as the court shall think fit for the purpose of procuring (subject to the consent of the Charity Commission under s.201 Charities Act 2011) the passing of a resolution approving the payment of the Grant by the members of [CIFF] so as to satisfy the requirements of s.217 and/or s.218 Companies Act 2006 in relation to such payment'. The Commission, therefore, contemplated that the court might make directions aimed at procuring the passing of any necessary section 217 resolution. For these reasons, I would propose to make such an order directing Dr Lehtimaki to vote in favour of the resolution to approve the Grant.
155 I should not leave this aspect of the matter without emphasising the specific nature of the decision I have reached, and the exceptional character of this case. I have looked at numerous charities' cases over three centuries and the present position has not arisen before. It may never arise again. The position might be different if there were numerous independent members of the company, or if the trustees of CIFF had not relinquished their discretion to the court. But here, the Commission and CIFF asked the court to decide and it has done so. The court is not overriding the provisions of the Companies Act 2006. It is simply determining that in the circumstances of this case, the interests of CIFF and of charity demand that the Grant is approved. For that reason, the only remaining voting member of CIFF must be directed to approve it, otherwise the essential interests of charity which the court is there to protect would be put at risk."
i) In paragraph 135 of his judgment, that he was:The parties' positions in outline
"not saying that no reasonable trustee or fiduciary could disagree with my view, nor could I bearing in mind the way the matter was argued; nor, for the avoidance of doubt, am I saying that anyone who disagreed with my view would automatically be acting in bad faith"; andii) In paragraph 150 of his judgment, that he took the view that the Charity Commission "should be given its statutory opportunity in the light of this judgment to consider whether to approve the making of a members' resolution under section 217 of the Companies Act".
i) Is Dr Lehtimäki subject to any (and, if so, what) fiduciary duties ("the Fiduciary Duties Issue")?
ii) Is the Court's inherent jurisdiction in relation to charities extensive enough to allow it to order a member to exercise a discretion in a particular way regardless of whether there is evidence of breach of duty on the part of the member ("the Inherent Jurisdiction Issue")?
iii) In the light of the answers to the previous questions, was the Chancellor entitled, on the facts of the present case, to direct Dr Lehtimäki to vote for a resolution under section 217 of the Companies Act 2006 approving the payment of the Grant ("the Present Case Issue")?
The Fiduciary Duties Issue
"First, the position held by each of them exists, not for his own, but for another's benefit – in the case of the director, for example, for the company; in the case of the trustee in bankruptcy, for the creditors. Secondly, the duties imposed on, and the powers exercised by, each have a source other than in an agreement between him and the person(s) for whose benefit he is required to act – with the receiver, for example, they stem from the order of the court; with the executor, from the will, legislation and the general law. Thirdly, as a general rule, each alone is ultimately responsible for determining how those duties are to be discharged, how those powers are to be exercised."In the present case, Mr Morpuss submitted, none of these characteristics exists. That there is no general obligation on members of a charitable company to act in the interests of the charity rather than his own is confirmed, Mr Morpuss suggested, by the fact that the Charity Commission recognises that people sometimes become members of a charity with a view to "tangible benefits, for example reduced admission fees to historical sites or particular areas" and "many members are involved primarily in order to gain access to information" (see "RS7 - Membership Charities", at 17). With regard to the second characteristic, Mr Morpuss contended that the relationship between a charitable company and its members "is not imposed upon the charity", but is "one created by the charity itself, and regulated by the charity's own rules and constitution". As for the final (and "decisive" – see paragraph 25 of "Fiduciary Obligations") characteristic, members have, Mr Morpuss observed, very limited powers, and the Charity Commission is always there in the background, with the consequence that "[n]one of the members' rights can freely be exercised so as to necessitate the intervention of Equity".
"The argument for the defendant was that the subscriber to a charity is under an obligation to give his votes for the best object, and that the plaintiff, if he gave his votes at the first election to what he thought the best candidate, incurred neither trouble nor prejudice, so that there was in that point of view no consideration; and if he gave his votes to the candidate whom he did not think the best, the whole agreement was void as against public policy.
But though some of us, at least, much disapprove of this kind of traffic, we can find no legal principle to justify us in holding that the subscriber to a charity may not give his votes as he pleases, answering only to his own conscience and reputation for the way he exercises his power."
"while there is no generally agreed and unexceptionable definition, the following description suffices for present purposes: a person will be in a fiduciary relationship with another when and insofar as that person has undertaken to perform such a function for, or has assumed such a responsibility to, another as would thereby reasonably entitle that other to expect that he or she will act in that other's interest to the exclusion of his or her own or a third party's interest".Writing extra-judicially, Finn J drew attention to the relevance of asking "for what purpose one party has acquired rights, powers and duties in the relationship: to promote his own interests, the joint interest, or the interests of the other party alone", noting that the latter two indicate a fiduciary relationship (see "The Fiduciary Principle", in "Equity, Fiduciaries and Trusts", ed. T.G. Youdan, 1989).
"The ordinary power of appointing new trustees, under a settlement such as this is, of course imposes upon the person who has the power of appointment the duty of selecting honest and good persons who can be trusted with the very difficult, onerous, and often delicate duties which trustees have to perform. He is bound to select to the best of his ability the best people he can find for the purpose. Is that power of selection a fiduciary power or not? I will try it in this way, which I offered as a test in the course of the argument. Suppose, as happens not unfrequently, that trustees, under the terms of the deed of trust, are entitled to remuneration by way of annual salary or payment. Could the person who has the power of appointment put the office of trustee up for sale, and sell it to the best bidder? It is clear that would be entirely improper. Could he take any remuneration for making the appointment? In my opinion, certainly not. Why not? The answer is that he cannot exercise the power for his own benefit. Why not again? The answer is inevitable. Because it is a power which involves a duty of a fiduciary nature; and I therefore come to the conclusion, independently of any authority, that the power is a fiduciary power."
"But, if I ask how any court of equity would regard this power, it seems to me that the only answer must be that it is a fiduciary power to be exercised with a single eye to the benefit of the beneficiaries. Let me suppose that the authorised persons, who may for this purpose be either the Vestey brothers or those who later answer that description (since the character of the power will not vary with those who exercise it) direct the trustees to invest the trust funds by way of loan to themselves at a low rate of interest without security, and that the trustees, regarding such an investment as very precarious, apply to the court and ask whether they must comply with the direction. In such a case it would, as it appears to me, be an irrelevant plea by the authorised persons that the right to direct investment was merely a part of a scheme for avoiding liability to income tax. The court could see nothing but a settlement with a wide power of investment of the trust funds and a mandate to the trustees to invest at the direction of certain persons. Nothing short of the most direct and express words would, I think, justify a construction which would enable those who exercised the power of direction to disregard the interests of the beneficiaries."In a similar vein, Lord Morton concluded (at 1132):
"The result is that, in my view, on the true construction of the trust deed, the power of direction is a fiduciary power, and the authorised persons are not entitled to use it for the purpose of obtaining a benefit for themselves. They must exercise it bona fide in what they consider to be the best interests of the beneficiaries."
"The power to remove trustees is vested in the committee, and although the settlor can fill vacancies or possibly appoint additional members of the committee even when there is no vacancy, that power, like the power to appoint new trustees, must I think be a fiduciary power. It could not properly be used to 'pack' the committee to ensure that the settlor has a majority which will follow his directions. Similarly, the committee's power to remove and his power to appoint new trustees are fiduciary powers."
"to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary?"In the present case, the Chancellor said that it was "not necessary … to decide in detail the nature and extent of the members' fiduciary duties", but (echoing the Charity Commission's "RS7 – Membership Charities") held that, "at least in the circumstances of this case, 'members [of CIFF] have an obligation to use their rights and exercise their vote in the best interests of the charity for which they are a member'" (paragraph 145 of the judgment). It would, the Chancellor considered, "be contrary to the whole regime established by the increasingly prescriptive legislative regime reflected in the Charities Act 2011 if the member of a company such as CIFF could vote in his own interests or in a manner detrimental to the charitable objects of the company" (paragraph 145 of the judgment).
The Inherent Jurisdiction Issue
"in such cases as I have mentioned it is to the discretion of the trustees that the execution of the trust is confided, that discretion being exercised with an entire absence of indirect motive, with honesty of intention, and with a fair consideration of the subject. The duty of supervision on the part of this Court will thus be confined to the question of the honesty, integrity, and fairness with which the deliberation has been conducted, and will not be extended to the accuracy of the conclusion arrived at, except in particular cases".Again, in Tempest v Lord Camoys (1882) 21 Ch D 571 Jessel MR said (at 578):
"It is settled law that when a testator has given a pure discretion to trustees as to the exercise of a power, the Court does not enforce the exercise of the power against the wish of the trustees, but it does prevent them from exercising it improperly. The Court says that the power, if exercised at all, is to be properly exercised."
"Charities operate within a framework of public law, not private law. The Crown is parens patriae of the charity and the judges of the courts represent the Crown in supervising what the charity is doing and in giving directions …. The Attorney General's function is to make representations to the court as to where lies the public interest as he sees it."
"The court has always had a general jurisdiction in respect of enforcement of trusts, and in relation to trusts of property dedicated to a charitable purpose a special jurisdiction by way of scheme to amend defects in machinery and further to direct in proper cases a cy-près application of assets. But I do not think that the double aspect of the definition of 'charity proceedings' indicates that 'jurisdiction with respect to charities' must be restricted to such jurisdiction that is unconnected with the enforcement of trusts. Rather I should have said that it was to avoid argument on a plainly vexed question."Buckley LJ likewise did not consider "the court's jurisdiction with respect to charities" to be confined to its jurisdiction to approve schemes. He explained (at 186-187):
"It is a function of the Crown as parens patriae to ensure the due administration of established charities and the proper application of funds devoted to charitable purposes. This it normally does through the instrumentality of the courts, but this is not the only way in which the Crown can regulate charities or the application of charitable funds. Where a charity has been incorporated by Royal Charter, the Crown may amend its constitution or vary its permitted objects by granting a supplemental charter. Where funds are given for charitable purposes in circumstances in which no express or implied trust is created, the Crown can regulate the application of those funds by means of a scheme under the sign manual. Where the Crown invokes the assistance of the courts for such purposes, the jurisdiction which is invoked is, I think, a branch of the court's jurisdiction in relation to trusts. In such cases the relief granted often takes the form of an order approving a scheme for the administration of the charity which has been laid before the court, but this is not the only way in which the court can exercise jurisdiction in respect of a charity or over charity trustees. The approval of a scheme of this nature is, so far as I am aware, a form of relief peculiar to charities, but it does not constitute relief of a kind given in the exercise of a jurisdiction confined to giving relief of that sort. The court could, for instance, restrain trustees from applying charitable funds in breach of trust by means of an injunction. In the case of a charity incorporated by statute this might, as was suggested in the present case, be explained as an application of the doctrine of ultra vires, but I do not think that this would be a satisfactory explanation, for a similar order upon unincorporated trustees could not be so explained. Or, by way of further example, the court could order charity trustees to make good trust funds which they had misapplied, or could order them to account, or could remove or appoint trustees, or could exercise any other kind of jurisdiction available in the execution of trusts other than charitable trusts. In every such case the court would be acting upon the basis that the property affected is not in the beneficial ownership of the persons or body in whom its legal ownership is vested but is devoted to charitable purposes, that is to say, is held upon charitable trusts. Any relief of this kind is, in my judgment, appropriately described as relief granted in the exercise of the court's jurisdiction with respect to charities, and, where the relief is such as to bind the body of trustees as a whole, this would, in my opinion, constitute control of the charity by the court in the exercise of its jurisdiction with respect to charities. I consequently feel unable to accept the suggestion put forward on behalf of the Attorney-General that the reference in section 45 of the Act of 1960 to the court's jurisdiction with respect to charities is in some way confined to its jurisdiction to approve charitable schemes."
"On the whole, I consider that the reference in the definition to the control of the court in the exercise of the stated jurisdiction is designed to point to a charitable institution in respect of which the court has power generally to supervise and direct the administration, to supply any defects in the regulations when such are revealed, to remove and appoint where necessary for the due administration of the institution trustees or governors, to make orders where necessary for that due administration as to vesting and otherwise of assets of the institution, and to make schemes for the cy-près application of assets in appropriate cases. In any given case it may be a question of degree whether an institution can fairly be said to be, within that jurisdiction, under the control of the court. But my conclusion is that an institution so closely under the control of the executive as is one of these training boards, with such minimal occasion for intervention by the court, is outside the statutory definition of 'charity.'"
"Although the beneficiaries cannot, in general, control the trustees while the trust remains in being, or commit them to a particular dealing with the trust property, they can, if sui juris and together entitled to the whole beneficial interest, put an end to the trust and direct the trustees to hand over the trust property as they direct; and this is so even if the trust deed contains express provisions for the determination of the trust."In the case of a charity, Lord Pannick said, the Attorney General represents the beneficial interest. Nonetheless, it is hard to see how the rule can apply in the case of a charity and, more specifically, there is no question of "put[ting] an end" to CIFF. The rule cannot, therefore, be applicable.
"But though this is such an authority coupled with an interest as would survive, yet it is so far a trust, that in case of misbehaviour the court may interpose, for it must be allowed, that the court has a particular free and extensive jurisdiction in the case of a charity, and not confined to the proper or formal methods of proceeding requisite in other cases."Given, however, the reference to "misbehaviour", the case does not assist on the extent of the Court's powers absent a breach of duty.
"This is all a matter of judgment for the trustees. There will be no one right answer. There will be one or more minimum benefits below which no reasonable trustees would go but subject to that, the level of provision and the method of its provision is properly a matter for them and not for the Charity Commission or the court …. It is not for the Charity Commission or the tribunal or the court to impose on trustees of a school their own idea of what is, and what is not, reasonable. The courts have never done that in the context of their supervision of trustees of private trusts and the same should apply to charities. There is nothing in the 2006 Act (including the duty to issue the guidance) which changes that position. But trustees are under the ultimate control of the courts. There is always a range of actions which they can take in a given situation. There is, of course, a limit outside which they must not step."
The Present Case Issue
"It would be remarkable if the High Court, having reached a reasoned and considered decision as to the desirability of the Grant in the best interests of CIFF, had to defer to the eccentric, if good faith, decision made by a single member when all other members were conflicted. I say eccentric, because Dr Lehtimaki has made it abundantly clear that he is motivated entirely by an economic approach and regards himself as only acting in the best interests of unspecified beneficiaries of the charity, rather than by the correct legal principles that I have stated. It is anyway in my judgment questionable whether Dr Lehtimaki would be acting on a proper basis if he rejected the court's reasoned decision as to the appropriate course for CIFF to adopt."
i) Although Sir Christopher was a very dear friend, he took his fiduciary duties seriously and would not allow his judgment to be impaired by personal factors;
ii) "The focus should always be on the best interests of CIFF's beneficiaries";
iii) The arguments for and against the Grant could be divided into "Direct factors" (comprising "The net effect on CIFF's charitable work" and "Solving the governance problem") and "Secondary factors" ("The overall impact on the UK charitable sector" and "The negative precedents of making the Grant");
iv) "I would reiterate that the only people I have a fiduciary duty towards are the intended recipients of CIFF's charitable work. While my reasoning is abstract, I find it useful to visualize the person to whom I am answerable for when taking decisions. To me, this is the HIV positive young woman with her HIV negative child I met in Mutare Hospital in Manicaland, Zimbabwe (whose husband was beating her up because taking the necessary medicines was an embarrassment for his family). I am not a 'soft' person, but with that image in mind, choices become much easier";
v) "Thus the only consideration to the Grant is whether it is a net benefit to the children in developing countries. If it is, then it should be paid. If it is not, then it should not be paid. It is that simple"; and
vi) The analyses that he had carried out made him think that it was "very difficult – on the currently available evidence – to decide whether the Grant is in the best interests of CIFF's beneficiaries".
Conclusion
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Chris hit a new personal wealth benchmark in 2020 at %5 billion. https://www.forbes.com/sites/nathanvardi/2020/01/20/billionaire-chris-hohn-becomes-a-hedge-fund-giant/amp/
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