Decision

Charity Inquiry: Moss Side and Hulme Community Development Trust

Published 3 August 2022

Applies to England and Wales

The Charity

The Moss Side and Hulme Community Development Trust (‘the charity’) was registered with the Commission on 29 August 2002.

It is governed by a memorandum and articles of association dated 8 March 1989 as amended by special resolutions dated 11 April 1989, 20 April 1989, 23 February 1993, 3 November 2000 and 6 June 2002.

In summary the charity’s objects are the promotion for the public benefit of urban or rural regeneration in areas of social and economic deprivation, in particular, Moss Side, Hulme and adjacent areas of Manchester.

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

Background and Issues under Investigation

On 2 October 2017, the charity became part of the Commission’s ‘Double Defaulters’ class inquiry, which examines charities which have defaulted on their statutory filing obligations with the Commission on two or more occasions in the last 5 years. The charity had failed to submit annual accounts for the financial year ending (‘FYE’) 31 August 2015 and 31 August 2016. The charity eventually filed its outstanding accounting information and was removed from that inquiry on 29 March 2018.

On 28 August 2018 the Commission opened a statutory inquiry into the charity following its failure to submit its accounting information for the FYE 31 August 2017. That inquiry concluded on 27 November 2020 following the receipt of the overdue accounting information and the issuing of an order made under section 84 of the Act to the two trustees of the charity, Mr Hartley Hanley and Mr Mike Bisson. This order required them to:

• pursue recruitment of new trustees
• advertise and hold an annual general meeting (‘AGM’)
• review the charity’s decision-making procedures
• review the charity’s processes to ensure compliance with statutory responsibilities concerning the timely submission of the charity’s accounts
• produce new policies and procedures that ensure conflicts of interest are avoided and managed
• review the charity’s activities
• ensure that there was no further unauthorised trustee remuneration

Mr Hanley and Mr Bisson were required to produce a report to the Commission within 6 months from the date of the section 84 order, detailing how they complied with each of the 7 requirements in the schedule of actions outlined in the order. No report was submitted.

Between January 2021 and September 2021 numerous attempts were made by the Commission to engage with Mr Hanley and Mr Bisson to ascertain their compliance with the section 84 order. These attempts were met with only little engagement from Mr Hanley and no response from Mr Bisson.

Over this period the Commission received complaints from the charity’s beneficiaries that no AGM had been called.

On 29 September 2021 the Commission opened a further statutory inquiry into the charity under section 46 of the Charities Act 2011.

The inquiry examined the extent to which the trustees were complying with their legal duties in respect of their administration, governance, and management of the charity and in particular, compliance with the section 84 Order issued on 9 July 2020 and the regulatory advice and guidance previously issued by the Commission.

Findings

The inquiry found that Mr Hanley and Mr Bisson had not complied with the section 84 order as follows:

Recruitment of new trustees and calling of an AGM

The Commission first informed Mr Hanley and Mr Bisson of the need to recruit additional trustees in October 2018. The charity’s governing document states there must be a minimum of four and a maximum of 17 trustees. According to the charity’s accounts, the charity had not had the required number of trustees since 2009.

No evidence was provided to the inquiry to confirm Mr Hanley or Mr Bisson had recruited or attempted to recruit additional trustees. The inquiry noted that an identical statement had being included in each of the charity’s accounts for the FYE 31 August 2018 and FYE 31 August 2020 which stated ‘As noted in the Memorandum and Articles of Association updated as at 6 June 2002, the board of directors is required to have at least four members on the board. The current board of directors acknowledge this and are actively trying to recruit new directors to the board’.

The charity’s governing document states that the charity shall in each year hold a general meeting as its AGM in addition to any other meetings. No evidence was provided to the inquiry that an AGM had been held or advertised and complaints from members of the public confirmed no steps had been taken to hold one.

The inquiry found that Mr Hanley and Mr Bisson’s failure to ensure that the charity operates in accordance with its governing document demonstrates misconduct and/or mismanagement in the administration of the charity.

To ensure that the charity was operating in accordance with its governing document the Commission exercised its powers to appoint an additional three trustees (‘the new trustees’) who along with Mr Hanley and Mr Bisson were directed to call an AGM within three months. Under the terms of the order all the trustees were to stand down at the AGM but had the option of standing again for election.

Following the appointments, the new trustees co-opted an additional two trustees and ensured that an AGM was held on 1 March 2022. Before the AGM took place the new trustees acted to remove Mr Hanley and Mr Bisson resigned as a trustee of the charity. The charity’s members elected the 3 trustees who had stood down together with the other two co-opted trustees at the AGM. Two of these have since resigned. There are now 5 trustees who are responsible for the management and administration of the charity.

Review the Charity’s decision-making procedures and process for filing accounts, produce new policies and procedures and review the charity’s activities

No evidence was provided to the Commission to demonstrate Mr Hanley and Mr Bisson had complied with the requirements of the section 84 order in this respect.

The inquiry found Mr Hanley and Mr Bisson’s failure to comply with the order of the Commission demonstrates misconduct and/or mismanagement in the administration of the charity.

Unauthorised trustee remuneration

The charity’s governing document explicitly prohibits trustee remuneration for the supply of work or goods to the charity. It was found in the previous inquiry that two of the trustees had been paid for services they provided to the charity which amounted to unauthorised remuneration in breach of the charity’s governing document. Mr Hanley and Mr Bisson were required under the terms of the section 84 Order to ensure that there was no further unauthorised remuneration.

Although Mr Hanley and Mr Bisson failed to report back to the Commission, the inquiry’s review of the charity’s bank statements found no evidence of any further payments being made to a trustee.

Conclusions

The Commission concluded that there had been misconduct and/or mismanagement in the administration of the charity by Mr Hanley and Mr Bisson by virtue of their failing to comply with an order of the Commission, the purpose of which was to ensure that the charity was being managed in accordance with its governing document.

There had been persistent and prolonged failures on the part of Mr Hanley and Mr Bisson to carry out their duties in line with legal requirements and guidelines. Over the past five years, during which time Mr Hanley and Mr Bisson were trustees, the charity was the subject of three Commission inquiries. The Commission further concluded that their conduct was such that they should be disqualified from holding the office of trustee or senior management functions at any charity and on 25 April 2022 both Mr Hanley and Mr Bisson were disqualified for a period of 7 years.

Regulatory Action Taken

On 1 October 2021 the Commission used information gathering powers under section 47 of the Charities Act 2011 (‘the Act’) to direct Mr Hanley and Mr Bisson to produce the report required in the section 84 order previously issued and to also furnish the Commission with an up-to-date members list.

On 6 December 2021 the Commission used section 76(3)(b) and section 337(1) of the Act to appoint three additional trustees and to direct the trustees to hold an Annual General Meeting within three months. All trustees were then directed to stand down at this AGM and were able to run for re-election if so desired.

On 25 April 2022 the Commission exercised its powers under section 181A of the Act to disqualify Mr Hanley and Mr Bisson from being a charity trustee or trustee for a charity or holding a senior management within a charity for a period of 7 years. This order came into force on 6 June 2022.

Issues for the wider sector

The purpose of this section is to highlight the broader issues arising from the Commission’s assessment of the issues raised publicly that may have relevance for other charities. It is not intended as further comment on the charity in addition to the findings and conclusions set out in the earlier sections of this report but is included because of their wider applicability and interest to the charity sector.

Charity trustees must comply with orders and directions of the Commission. In some circumstances it may be a criminal offence (or contempt of court) for a charity or a trustee to not comply with an order or direction of the Commission.

Charity trustees must comply with all their legal obligations. An important part of their duties is following their charity’s governing document and the wider law. Not complying with the legal requirements may be regarded as misconduct and/or mismanagement in the administration of the charity and prompt regulatory action by the Commission.

Charity trustees are the people who share ultimate responsibility for governing a charity and directing how it is managed and run. They are the representatives of the charity in the charity sector. The conduct of trustees can be a key driver of public trust and confidence in the charity sector. When the conduct of trustees falls below the standards expected there can be damage to the reputation of individual trustees, the charity and possibly the wider charity sector.

More information can be found from The essential trustee: what you need to know, what you need to do