Regulator applies to court for judgment on funds in Dove Trust case

The Charity Commission is asking the court to decide how the Interim Manager (IM) appointed to run the Dove Trust can lawfully distribute funds to those owed money by the charity.

The Dove Trust ran the online giving website CharityGiving, which was suspended in July.

The IM has concluded that there is, at present, approximately £500,000 available for an initial distribution to over 1,800 charities and good causes owed money by the Dove Trust.

The Commission wants the IM to make a distribution as soon as possible, but has been advised that, given the complexity of the charity and trust law issues involved, only the court can decide on the fairest and most equitable approach to distributing currently available funds.

There are several approaches the IM could take in distributing the available funds (see notes to editors).

Michelle Russell, head of investigations and enforcement at the Charity Commission, said: “Our priority is to make sure that the available funds go to the charities quickly, but also fairly and securely.

"We know many charities have been waiting patiently for the amounts they are owed and they and their donors will feel frustrated that this is now going to court.

"We are frustrated too, and are only taking this step reluctantly. Both we and the IM are keen to make a distribution as a matter of urgency.

"But because of the legal complexities in this case, we have no choice but to seek the court’s decision as to which process must be followed. Not seeking the court’s judgment on this would risk creating further delay for all charities involved.

"We are aware of the awkward timing of this news, but we wanted to let charities know as soon as possible and the court application is being made today.”

The Commission is making the application today and will ask the court to expedite the case.

It hopes a directions hearing will take place in early January 2014, with a full hearing following early in 2014.

The Commission will fund the court application and is also covering the costs of the IM’s appointment so far to ensure as much money as possible can go to the charities.

The IM estimates that the Dove Trust’s potential liabilities, the majority of which is the money owed to charities, total around £2.2M.

This is not a ‘shortfall’ figure. How much is ultimately available to charities will depend on the success of the recovery of funds on behalf of the charity. All available options for recovery are being pursued including from debtors and trustees.

Ultimately, the trustees are responsible and liable for making good any losses.

Separately, the Commission’s statutory inquiry into the Dove Trust continues.

The inquiry has concluded that there was misconduct and mismanagement at the charity.

The Commission exercised its power to give a statutory notice to Keith Colman, one of the trustees of the Dove Trust, of its intention to remove him as trustee.

However, Colman resigned from his position after the notice was served on him and before the Commission was able to remove him.

Russell commented: “This highlights a problem with our legal powers. We can only remove individuals from a specific trusteeship position; we have no power to disqualify individuals from acting as a trustee in the future or remove them from other trusteeship positions. We have consistently asked for this loophole to be closed.

"The Cabinet Office is currently consulting on proposals to strengthen and extend the Commission’s powers, including a general power of disqualification, which would do just that.”