Decision

Charity inquiry: Ethiopian Orthodox Tewahdo Church St Mary Tsion

Published 13 April 2023

Applies to England and Wales

The charity

Ethiopian Orthodox Tewahdo Church St Mary Tsion (‘the charity’) was registered on 28 January 1997. It was governed by a trust deed dated 11 June 1992.

The charity was removed from the Commission’s register of charities on 27 March 2023.

The charity’s entry can be found on the register of charities.

The charity’s objects were to propagate the Gospel of Christ in advancing the Ethiopian Orthodox Faith and in particular the Charitable Work of the Ethiopian Orthodox Church St. Mary of Debre Tsion particularly in London and the Home Counties. It ran an Ethiopian Orthodox Tewahdo Church in Battersea.

Following a High Court decision, the charity’s assets and property were transferred to newly formed Charitable Incorporated Organisation (‘CIO’) which has similar objects as the charity. Its entry can be found on the register of charities.

Background and issues under investigation

The Commission first engaged with the charity in April 2013. A religious schism had created two separate factions within the charity which gave rise to an entrenched and long-running dispute over its trusteeship and management. This was causing disruptions to the charity’s religious services and was also impacting on charity’s finances and governance. As a result, the trustees persistently failed to meet their statutory duty to submit annual accounts and annual returns to the Commission on time.

The Commission repeatedly sought relevant information from the charity to address these regulatory concerns. However, this was not provided, and a statutory inquiry into the charity was opened on 6 October 2014 under section 46 of the Charities Act 2011 (‘the Act’).

The scope of the inquiry was to examine:

• whether there is a properly constituted trustee board in place
• whether the trustees of the charity’s funds have discharged their legal duties and responsibilities under charity law
• the adequacy of the charity’s financial and risk management controls including any significant risk to and potential misapplication or loss of charitable assets
• the repeated failure to comply with legal obligations in relation to the filing of annual accounts and annual returns
• the administration, governance and management of the charity and whether, and to what extent, there has been mismanagement and/or misconduct on the part of those acting in the administration and management of the charity

The Inquiry closed on 13 April 2023 with the publication of this report.

Findings

The inquiry found that the two factions within the charity both considered themselves to be the charity’s rightful trustees. Each party disputed the legitimacy of the appointment of the other. So entrenched was this dispute that it was impacting on almost every aspect of the charity’s operation which included the provision of services to the charity’s beneficiaries. This also allegedly contributed to public disorder within the local community. All attempts by the inquiry to get the parties to mediate failed.

The Commission cannot determine trusteeship, only the courts can. Being satisfied that all alternative avenues to try to resolve the ongoing dispute had been considered, on 28 January 2015, the Commission authorised an application for charity proceedings submitted by one of the parties in the dispute. The Commission provided its consent for that party to instigate court proceedings to determine the identity of the trustee body, the validity of the charity’s trust deed, and if deemed to be valid, whether it and subsequent Byelaws had been effectively adopted by the trustees.

Whilst the charity was subject to charity proceedings the inquiry remained open, but it was not necessary for the inquiry to use its powers of remedy and protection.

On 30 April 2018 a High Court judgment was handed down that named interim trustees who were directed to form a new CIO. The High Court directed the interim trustees to register the CIO with the Commission, appoint trustees and transfer the assets of the charity to the new CIO.

The new CIO, Ethiopian Orthodox Tewahedo Church St. Mary of Debre Tsion, London (charity registration number 1180723) was registered with the Commission on 5 November 2018. There followed a series of delays during which the actions of the interim trustees were further challenged, the matter returned to the High Court and new timetables were set for the holding of an Annual General Meeting (‘AGM’) to elect new trustees for the CIO.

The AGM was held on 14 December 2021. The CIO trustees instructed a solicitor to prepare transfer deeds for the trustees of the charity (1060394) to sign. The agreed date of transfer was 06 March 2022. Although a partial transfer of assets did occur by this deadline, the trustees of the charity failed to sign the transfer deeds. The deadline was extended until 01 June 2022, however the trustees of the charity again failed to action the transfer.

In order to facilitate the transfer of assets and property and avoid further delay the inquiry decided it was necessary and proportionate to use its powers. On 13 September 2022 the inquiry made an order under s84 of the Act to direct the trustees of the charity to sign the outstanding documents and to provide details of the charity’s remaining assets. The inquiry process-served the Orders to the trustees in order to ensure all the relevant documents were delivered and to increase the likelihood of compliance. A majority of the trustees signed the documents, meaning that the transfer could take place.

On 31 January 2023 the inquiry received confirmation from the solicitor representing the CIO trustees that the completed transfer deeds had been submitted to HM Land Registry. The inquiry therefore understands the transfer of the property (the church) to the CIO has taken place.

The inquiry removed the charity from the register of charities under section 34(1)(b) of the Act, on the grounds it has ceased to operate.

Conclusions

The Commission concluded that the dispute at the charity directly contributed to the issues faced by the charity. Individuals on both sides of the dispute were unable to put their differences aside and co-operate for the benefit of the charity and its beneficiaries.

The Commission further concluded that it was not proportionate to attempt to investigate the history of the administration of the charity whilst the charity proceedings were ongoing. It was also not proportionate to undertake any further investigation once the charity proceedings in relation to the dispute between the trustees had concluded and the assets and property of the charity transferred to the CIO.

A significant amount of time and resources of the charity have been expended on seeking to resolve the dispute and related litigation. It is important that all parties concerned in this matter look to the future and ensure that the CIO is run successfully in accordance with its governing document for the public benefit in general and specifically for the beneficiaries.

Regulatory Action Taken

During the inquiry the Commission used its powers under s47 and s52 of the Act to obtain information.

On 28 January 2015, under s115 of the Act, the inquiry provided consent to a party of the dispute to bring charity proceedings for the High Court to determine the identity of the trustees, validity of the charity’s trust deed and, if valid, whether it and subsequent Byelaws had been effectively adopted by the trustees.

On 7 January 2022, the inquiry provided the trustees of the newly formed CIO with regulatory advice and guidance under s15 (2) of the Act.

On 13 September 2022, the inquiry issued Orders under s84 of the Act to direct the trustees of the charity to sign the transfer deeds. On DATE the charity was removed from the register on the grounds that it ceased to exist, under s34(1)(b) of the Act.

Issues for Wider Sector

The Commission expects trustees to consider legal action only after they have explored and, where appropriate, ruled out any other ways of resolving the issue in dispute.

Legal action can present significant risk to a charity’s beneficiaries, assets and reputation. A trustee body has a duty to manage risk responsibly by identifying and assessing the risks their charity might face and deciding how to deal with them. The Commission’s role, where concerns are raised with us, is to ensure that the trustees have made their decisions in the best interests of their charity.

Further information can be found in our guidance Charities and litigation: a guide for trustees CC38.