Charities Regulatory Authority v Ellard (Approved)

Factual and Procedural Background

This opinion concerns an appeal to the High Court by way of case stated from a decision of the District Court. The District Judge acquitted the Respondent on a directed acquittal after he was charged with failure to comply with a statutory requirement under section 65(2)(a) of the Charities Act 2009 (as amended) ("the 2009 Act"). The charge arose because the Respondent failed to produce books, documents, or other records as requested by an inspector appointed by the Applicant, the Charities Regulatory Authority, pursuant to an investigation into a registered charity. The inspector had requested documents relating to an invoice and business relationship between a company of which the Respondent was company secretary and the charity under investigation. The Respondent did not comply with the request, leading to prosecution. The District Judge acquitted the Respondent on the basis of his interpretation of the statutory provision, which the Applicant challenged by requesting a case stated for the High Court to determine the correct interpretation of section 65(2) of the 2009 Act.

Legal Issues Presented

1. Whether the District Judge was correct in his interpretation and application of section 65(2) of the Charities Act 2009 (as amended).

Arguments of the Parties

Applicant's Arguments

• The District Judge erred in interpreting section 65(2) by imposing an implied requirement that third parties be notified of the statutory powers prior to contracting with a charity.
• It is sufficient that the Respondent was made aware that failure to comply with a request under section 65 may be criminalised.
• Case law such as DPP v Mulligan and DPP v BA support that the extent of notification depends on context but does not require pre-contractual notification.
• If fiduciary duties prevent a company officer from complying, this does not render the statutory requirement unenforceable.
• The decision should be reversed and remitted for fresh hearing.

Respondent's Arguments

• The powers under section 65(2) must include protections for third parties providing goods or services to charities, including contractual provisions alerting them to the statutory obligations.
• The District Judge was correct to require that third parties be informed of these powers in advance and be given the opportunity to decline relations.
• The Respondent’s fiduciary duty to the company prevented compliance without board approval.
• Section 65(2) is unconstitutional insofar as it exposes third parties to criminal liability without adequate protections, though this constitutional issue was not before the District Judge or the High Court in this appeal.
• The inspector must be satisfied that the person actually possesses or controls the documents before requiring production.
• The statutory powers allow for arbitrary deadlines which may conflict with other laws such as the Companies Act and GDPR, raising fairness concerns.

Table of Precedents Cited

Court's Reasoning and Analysis

The court examined the District Judge's interpretation of section 65(2) of the Charities Act 2009, which implied that third parties must be notified of the statutory powers before contracting with a charity and be given an opportunity to decline relations. The court found no explicit or implicit statutory language supporting such a limitation. It reasoned that allowing a charitable organisation to immunise third parties from statutory powers by failing to notify them would undermine the purpose of the Act and the investigatory powers granted to inspectors.

The court emphasized the primacy of the statutory text and its ordinary meaning, citing recent authoritative guidance on statutory interpretation. The words of section 65(2) allow an inspector to require production of documents or attendance if the inspector considers a person may be in possession of relevant information, without a precondition that the inspector be satisfied that the person actually possesses the documents.

The court also addressed the District Judge’s alternative interpretation that the inspector must be satisfied in advance that the person has the documents. It rejected this, noting the statute’s wording ("may be in possession") suggests a lower threshold and no explicit precondition exists.

The court clarified that while a person cannot be criminalised for failing to produce documents they do not have or cannot access, this practical defense does not impose a legal precondition on the inspector’s power to require production.

The court found that the Respondent had been properly informed in the letter of the statutory power and the criminal consequences of failure to comply, satisfying the requirement that a person be notified of the criminalisation of non-compliance.

The court declined to entertain constitutional arguments not before the District Judge or properly raised in the case stated.

Holding and Implications

The court held that the District Judge was incorrect in his interpretation and application of section 65(2) of the Charities Act 2009.

The effect of this decision is to confirm that inspectors appointed under the Act have broad investigatory powers to require production of documents or attendance from persons who may possess information about charitable organisations without an implied pre-contractual notification requirement. The ruling clarifies that the statutory powers are not limited by the Respondent’s fiduciary duties or by a requirement that the inspector be satisfied in advance of the person’s possession of documents.

This decision reverses the District Court’s acquittal and remits the matter for further proceedings consistent with the correct interpretation of the statute. No new precedent beyond the correct statutory interpretation was established.