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10: Can an unincorporated charity sue for libel?

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10: Can an unincorporated charity sue for libel?
Leave your thoughts Helen Fry

By Helen Fry

The past year has demonstrated that a charity’s ability to act swiftly when threatened with reputational damage can be essential to its survival. With the sector under unprecedented scrutiny from politicians and the press, charities must be able to counter damaging narratives before they take root, particularly those which are false or malicious. Unincorporated charities, however, should be aware that they are in a uniquely vulnerable position when it comes to such attacks.

Charities and defamation

When faced with false allegations, the ability to threaten defamation proceedings is a key weapon in a charity’s arsenal, albeit one of last resort. Changes effected by the Defamation Act 2013 have, however, made it harder for corporate bodies (including charities) to successfully challenge a defamatory statement – be it libel (a statement published in permanent form) or slander (usually a comment made orally) – and for non-corporate charities, it may be impossible.

The North London Mosque Trust v Policy Exchange

In 2009, the High Court’s ruling in The North London Mosque Trust v Policy Exchange & Another highlighted the difficulties unincorporated charities face. The Trust had been identified as a purveyor of extremist literature by the think tank Policy Exchange in its widely-publicised report ‘The Hijacking of British Islam’. After the report’s conclusions and methodology were comprehensively debunked by a Newsnight investigation, the Trust issued proceedings for libel.

Despite the apparent strength of the Trust’s claim, Policy Exchange succeeded in having it struck out on the basis that the Trust was not a legal entity capable of bringing proceedings. The Trust argued that a lack of legal personality – which generally prevents unincorporated bodies from suing or being sued – should not frustrate a claim by a charitable trust when it came to defamation, suggesting that an exception analogous to the special rules for Trade Unions should be applied. The High Court disagreed; in the absence of an explicit statutory exception for charities, it refused to find an implied one.

The Court rather starkly asserted that the Trust did not, legally speaking, exist, let alone have a reputation to protect:

‘A non-corporate charity can, in a loose sense, have a good or bad reputation which might encourage or discourage people from giving it money, for example, but a loose sense is not good enough when it comes to a claim for libel.’

An attempt to get around this difficulty by having individual trustees bring the claim on the Trust’s behalf also failed – proceedings could not be brought on the Trust’s behalf because the Trust had no claim to begin with.

The current position

The alarming impression given by this judgment that an unincorporated charity has no means whatsoever of protecting itself from an unjustified attack has been mitigated slightly by a subsequent decision giving the Trust permission to appeal. It was held that there was, after all, one route open to the Trust if it wished bring proceedings against Policy Exchange – individual trustees could bring a claim in their own names, arguing that they had been personally defamed by Policy Exchange’s slurs against the Trust. The unfortunate lack of clarity in the law was noted by the Court of Appeal:

‘We have reached the stage where very fine lines are having to be drawn about the constitution and status of libel claimants, and it may be that a degree of clarity about the matter at this level would be of general assistance.’

The Trust’s failure to take this approach from the start seems to have been attributable to a (valid) concern that any claim brought by a trustee as an individual would expose them, should the claim fail, to a costs liability which the Trust could not indemnify (since it would not be the Trust’s reputation which was being defended). The trustees’ reluctance to take on such a risk seems to have persisted – they did not proceed with the appeal, instead reaching an out of Court settlement with Policy Exchange.

The hoped-for clarity on this point therefore remains elusive. For now, the original decision reflects the law as it stands, and it continues to be relied upon to thwart defamation claims by non-corporate bodies. In July of this year, it was cited by none other than Donald Trump, who successfully argued that the unincorporated Communities United Party did not have standing to bring defamation proceedings against him in respect of various comments he had made about the UK’s Muslim population (Mr Kamran Malik v Mr Donald John Trump).

Arguably, the law has been left in an unsatisfactory and contradictory position, with non-corporate charities’ legal status preventing them from suing for libel but not, for example, from bringing claims in passing off. For now, an unincorporated charity must assume that any slur against it can be defended only insofar as it amounts to a slur on its individual members – and only insofar as those individual members are willing to take on the costs risks of bringing a claim.

20 October 2016

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