Charity trustees: do as you are told?

The Supreme Court in London recently considered whether the trustee of a charity can be obliged to exercise his discretion in a specific way.

The Children’s Investment Fund Foundation (CIFF) is a charitable fund established in 2002 by husband-and-wife team Sir Christopher Hohn and Jamie Cooper. During their matrimonial breakdown, it was agreed that Ms Cooper would resign from CIFF in exchange for its donation of $360m to her new charity Big Win Philanthropy.

The resolution required the express consent of CIFF’s three trustees, including Hohn and Cooper. Given their proximity, both Hohn and Cooper recused themselves from the vote. This left the claimant, Dr Lehtimäki.

Under the Companies Act 2006 and the Charities Act 2011, any payment in connection with the loss of office must be approved by the members of the company and the Charity Commission.

The question was whether Dr Lehtimäki, who had not made his voting intention clear, was obliged to vote in favour of such a motion.

The High Court determined that, as a fiduciary, he was.

The Court of Appeal determined that, as a fiduciary, he wasn’t.

Cue the Supreme Court.

Lady Arden, giving the judgment of the court, determined that Dr Lehtimäki, as a fiduciary when acting as a member of CIFF, owes ‘a single-minded duty of loyalty’ in the exercise of that role. The court can direct a fiduciary to vote in favour of a resolution once it has resolved that it is in the charity’s best interests. The Companies Act does not prevent this. Lord Reed agreed, sort of, in a dubitante speech. 

Accordingly, Dr Lehtimäki was ordered to vote in favour of the resolution.

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