The Official Receiver brought directors disqualification proceedings following the collapse of the prominent children’s charity, Kids Company, against the Trustees and the Chief Executive, Ms Batmanghelidjh.
In this bold and damning judgment, Mrs Justice Falk roundly dismissed the Official Receiver’s case, finding it in parts “oppressive”, and gave stark recommendations regarding the OR’s obligations to present disqualification proceedings in a fair and balanced way.
This is the first time such proceedings have been pursued against the directors of a charitable company and the case raised novel issues of de facto directorship and the scope of trustees’ duties in this context.
Mrs Justice Falk emphasised that:
“The charity sector depends on there being capable individuals with a range of different skills who are prepared to take on trusteeship roles. Most charities would, I would think, be delighted to have available to them individuals with the abilities and experience that the Trustees in this case possess. It is vital that the actions of public bodies do not have the effect of dissuading able and experienced individuals from becoming or remaining charity trustees …
With respect to Ms Batmanghelidjh, Mrs Justice Falk held:
“I have concluded that Ms Batmanghelidjh was not a de facto director. If I am wrong about that then I would still not have made a disqualification order against her … I would also point out the enormous dedication she showed to vulnerable young people over many years and what she managed to achieve in building a charity which, until 2014, was widely regarded as a highly successful one doing what senior members of the government rightly described as incredible work. It would be unfortunate if the events the focus of this decision were allowed to eclipse those achievements.”
The trial was conducted as a “hybrid” trial during the Covid-19 pandemic. The advocates and most witnesses were present in court, with other participants generally attending remotely. Press and public were able to view and hear the proceedings via a link to an adjacent court room.