The High Court has delivered judgment in the case of Trustees of the Celestial Church of Christ v Lawson. This decision will be of particular interest to charity trustees for several reasons. The judge, HHJ Hodge QC, considered not only the legal principles regarding the interpretation of the charity’s constitution, but also the employment and trustee status of the Defendant, the applicability of the rules of natural justice to charities and the ability of a charity to bring an action for passing off.
The case concerned an internal dispute within a charitable unincorporated association, between the Trustees of the Celestial Church of Christ, Edward Street Parish (Claimants) and the congregation’s “Shepherd in Charge”, Mr Dennis Olumide Lawson (Defendant). Competing factions of the church congregation were split over their support for or opposition to the Defendant. This escalated to the point at which “confrontational, aggressive and wholly inappropriate” behaviour was being exercised by the congregation, requiring police intervention.
As a result of his behaviour towards other members of the Celestial Church, the Defendant was dismissed from the position of Shepherd in Charge and his trusteeship. This decision was taken by the Parochial Committee of democratically elected trustees. The Defendant rejected the decision, prompting the Claimants to issue proceedings seeking a number of orders, including the removal of the Defendant if their decision was invalid.
Judge Hodge QC described the constitution as “an unsatisfactory document”. Crucially in this case, the constitution did not contain clear provisions for the appointment or removal of the Shepherd in charge. The Defendant argued that the constitution was not the sole governing document of the Parish and that, rather, the worldwide Nigeria diocese constitution should also be taken into account.
The court considered another case, Cherry Tree Investments Ltd v Landmain Ltd, which related to the use of a collateral document to aid with the interpretation of a registered charge, to aid its decision on this point. There, it was decided that “the public nature of a registrable legal charge meant that the terms of a collateral document … which the parties had chosen to keep private and off the register of title could not be allowed to influence the process of interpretation”. Judge Hodge QC considered that the same principle applied here to the use of the Nigeria diocese constitution, which was not lodged with the Charity Commission as a governing document of the Edward Street Parish, as an aid to the interpretation of the Parish’s governing document, which had been so lodged.
The court further held that the “ordinary principles of contractual construction apply to the exercise of determining the governing relations”. In the circumstances, inconsistencies between the Parish and worldwide constitutions led the court to find that the provisions of the worldwide constitution were not a relevant consideration for interpretation of the Parish constitution.
Under the terms of the Parish constitution, Judge Hodge QC found the democratically elected trustees of the Parochial Committee were therefore entitled to take the decision to dismiss the Shephard.
The court found that the Defendant was an officer, rather than an employee of the Parish, despite the Defendant’s remuneration. This was considered to be a stipend. The determining factors for the court were the absence of a written contract of employment, the lack of control exercised by the Parish and the duties of the Defendant. The Defendant’s role as a trustee was consequent on his position as Shepherd in charge. It would therefore conclude on his dismissal as Shepherd in charge.
Rules of Natural Justice
The Defendant suggested that, even if the Parochial Committee had the power to dismiss him, there were real problems both of bias and of the appropriate make-up of the decision making body.
In the circumstances, the court found that the decision to dismiss the Defendant was a fair one and taken “in the best interests of the Parish …. in the furtherance of, its charitable objects”. The persons acting on behalf of the charity must act fairly, responsibly and reasonably, and must follow the rules of fair procedure insofar as these are consistent with the Objects of the charity. However, the position of the Defendant was no longer tenable and, given the split that had emerged among the congregation, the procedure followed was as fair as it could be.
The court briefly considered whether a charity can bring an action for passing-off. Judge Hodge QC found that this was possible, despite the lack of a trading activity. A claim could still be brought on the basis of the fund-raising activities, reputation and image of a charity.
This decision gives much food for thought for charities, in particular those that might be enduring their own internal disputes, for its clarification of the applicability of the rules of natural justice to processes in these circumstances where there are issues of bias raised.
It also clarifies points in relation to the use of collateral documents as aids to the interpretation of governing documents of charities, as well as the ability of a charity to bring an action for passing off despite a lack of trading activity. It reconfirms the position regarding the employment status of a minister of religion.