Criticisms raised in a Charity Commission’s report into the running of defunct children’s charity Kids Company were “unfair” and “one-sided”, the High Court has found.

My Justice Sheldon found that concerns raised in the 2022 report by the regulator into payments made by the charity to clients “are unbalanced and one sided” and “extremely unfair to the charity and the trustees”.

Despite his concerns he upheld the Commission’s finding of mismanagement of the charity’s finances and rejected concerns from the charity’s former trustees that the Commission’s findings were predetermined.

“There is a high threshold to substantiating an allegation of apparent predetermination and that threshold was not met in this case by a wide margin,” he said.

He also said that the Commission “has a discretion as to what to include in the report of a statutory inquiry, that discretion must be exercised lawfully”.

The High Court case into the regulator’s report was brought by the charity's former clinical director Michael- Karim Kerman after concerns were raised by the charity’s former trustees that the report was “highly contentious” and “deeply flawed”.

The charity’s closure became the subject of a long running legal battle in recent years after the Official Receiver sought to disqualify the charity's founder the late Camila Batmanghelidjh, and the charity’s trustees from being company directors.

But despite being cleared by the High Court in 2021, the Charity Commission’s report criticising the running of the charity was published a year later.

“The judgment is the third of three investigations which have now vindicated Kids Company, its trustees, and its late director Camila Batmanghelidjh,” said a statement by the former trustees’ legal team at Landmark Chambers.

Among those welcoming Sheldon’s comments is Good Law Project, which had worked with the charity.

“Questions must now be asked about why the Charity Commission chose to waste huge sums of public money producing and defending a flawed report,” it said.

‘We made important errors’

The Charity Commission said: “We acknowledge its finding that we made important errors in relation to two paragraphs of the report and will act to remedy this.”

But it welcomed the High Court’s decision to uphold its finding of mismanagement and its work in drawing independent regulatory conclusions.

“The judgment notes we took care in the inquiry report to point out areas in which the charity’s trustees were acting within their duties and responsibilities, and where we found external criticism of the charity was unfounded,” added the regulator.

“Our inquiry report stated clearly there was ‘no dishonesty, bad faith or inappropriate personal gain in the operation of the charity’.”

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