Although rare, Managing Trustees do sometimes find themselves with little option but to issue Court proceedings or to defend a claim that has been brought against them. Use the guidance on this page to help you understand what you need to do if you find yourself in this position.
When do Managing Trustees become involved in litigation?
Managing Trustees can become involved in litigation whether to issue a claim to protect the best interests of the charity e.g. to recover charity assets or to respond to (defend) a claim brought against the charity. The most common types of claim include:
- Possession claims – Claims to recover possession of premises let out on residential or non-residential tenancies or for unauthorised use of Methodist premises.
- Construction claims – Disputes relating to works carried out to Methodist building including professional negligence and breach of construction contracts.
- Debt claims – Unpaid debts often relate to property including recovery of unpaid rent or licence fees, disputes relating to utility bills and fees payable under construction contracts.
- Personal injury claims – Claims often issued against Managing Trustees for personal injury. Claims may relate to property in terms of injury arising on Methodist premises.
- Employment claims – Any claims brought against Managing Trustees by lay employees. Though not property related, TMCP can provide guidance on the Methodist requirements to be fulfilled and assist in obtaining Connexional Team Consent.
What is TMCP’s role in litigation?
TMCP is primarily there to provide support and guidance to Managing Trustees facing litigation and will assist Managing Trustees in obtaining the Connexional Team consent they need before issuing or defending a claim (see “What do you do before issuing Court proceedings or defending a claim brought against the Methodist Church”). TMCP also needs to be kept up to date with how the claim is proceeding.
Where property is involved in claims, TMCP will in almost all cases hold such property as custodian trustees on trust for the Managing Trustees of the property. However, TMCP must not be made party to Court proceedings because as custodian trustees, TMCP has no role in the day-to-day management of property. Its role is to concur in and perform all lawful directions of the Managing Trustees to enable the Managing Trustees to administer the charity effectively. This means that action should solely be taken by the Managing Trustees of the property (or other charitable assets) involved.
For claims brought against Managing Trustees, Counsel’s opinion confirms that TMCP should not be made party to proceedings. This is based on the principle (further to s.4(2)(d) of the Public Trustee Act 1906 and s.16 of the Methodist Church Act 1939) that a custodian trustee is not liable to a third party for any act or default on the part of the Managing Trustees.
Parties bringing a claim against the Church often misunderstand the position and seek to make TMCP a party to the litigation because it holds the legal title to the property. If a claimant has decided to make TMCP a party to a claim in error, please let TMCP know as a matter of urgency so that we can assist Managing Trustees and provide guidance on the role of TMCP. (Contact TMCP Legal.)
| TMCP has developed specific briefing notes for Managing Trustees’ solicitors and Methodist Insurance explaining TMCP’s role so please contact TMCP if you require a copy of these confirming, when writing to us, which Managing Trustee body is involved in litigation and the name of the property involved. |
What do you do before issuing Court proceedings or defending a claim brought against the Methodist Church?
If Managing Trustees wish to issue a claim or they have received a letter of claim through the letterbox, what do they do next?
Stage (1) - Initial Steps
Step 1: Check your insurance position
First, Managing Trustees should notify their insurer about the potential claim. Are you covered under your insurance policy for the type of claim you wish to pursue or that has been issued against you? Will any legal costs be covered by your legal expenses cover? Refer to the Legal Expenses page of the Methodist Insurance website for contact details and advice on what to do if you are insured with Methodist Insurance.
If you do you have cover, ask your insurer to provide you with initial guidance on how to respond and what steps to take in terms of collecting information or reviewing policies/procedures etc.
If your insurer is unable to help you, it is recommended that you speak to one of the Methodist panel solicitors to obtain such initial advice. As charity trustees the Managing Trustees will want to obtain appropriate professional advice to help them protect the best interests of the charity.
Step 2: Notify TMCP
Please contact TMCP Legal to advise us of any potential claims so that we can help you to fulfil the steps set out in on this Litigation page, provide appropriate guidance on the Methodist requirements and notify our insurer if necessary. Please do not disclose any information to us relating to any safeguarding matters or sensitive information e.g. health information about any individuals.
Step 3: Can the claim be settled?
The Managing Trustees’ insurer or solicitor will be able to provide initial advice on whether it is in the best interests of the charity to proceed with a claim or if the dispute can be settled between the parties. If a claim has been issued against the Methodist Church, your advisers may advise you that while they hope the matter can be settled, a defence needs to be filed first to allow further time to settle a claim. In this case, please refer to Step 4.
Ultimately the Managing Trustees need to satisfy themselves that the best interests of the charity are furthered by pursuing a claim which could be costly to the charity as well as being risky and consume the charity trustees’ valuable time. Charity trustees would want to avoid a “Pyrrhic” victory; a victory that comes at a great toll to the charity.
Stage (2) - Obtaining the consent of the Connexional Team under Standing Order 931(5)
Step 4: Gathering the evidence to support a request for consent
If a decision is taken to pursue a claim or file a defence, the consent of the Connexional Team under Standing Order 931(5) must be in place before a claim is issued, defence filed or Alternative Dispute Resolution (‘ADR’) commenced.
To obtain this consent Managing Trustees must first:
1. Pass a resolution locally authorising the Managing Trustees to proceed to litigation and incur costs up to a stated amount. TMCP Legal can provide a template for your use. Please contact TMCP.
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2. Obtain and consider legal advice on the issue. This legal advice should be obtained in an email or letter and must set out the merits, risks and costs involved in issuing or defending the claim. To proceed with any form of litigation the written advice would need to show that the merits outweigh the risks and costs.
Step 5: Requesting the consent of the Connexional Team
Once the two documents in Step 4 are in place, please contact TMCP Legal so that we can assist you by presenting your case to the Connexional Team. Please send the resolution and legal advice to TMCP Legal.
| We need Connexional consent quickly – how can we ensure it is in place?
The Connexional Team is aware of the urgency that is often a feature of litigation, and the requests for consent can be turned around relatively quickly. However, please ensure your legal advisers and insurer are aware of these steps when you first instruct them to assist you with your claim so that they can factor in the time required. The earlier you can provide the evidence in Step 4, the earlier this request can be made. |
Step 6: Deed of Indemnity
Please refer to the Litigation Focus Note for Managing Trustees to check whether a Deed of Indemnity is required. If it is, the consent given in Step 5 above will usually be subject to this being in place.
Stage (3) - Consent of the Connexional Team in place
Step 7: Commencing litigation or ADR or filing a defence
TMCP Legal will let you know as soon as Connexional consent is in place. Your solicitors can then issue the claim, file the defence or commence ADR.
Step 8: Keeping TMCP up to date
Your solicitors should keep TMCP up to date in relation to any ongoing proceedings until these are settled/ come to a conclusion. Your solicitors should also bear in mind that TMCP needs to rveview any court document before these are filed.
While it is hoped that Managing Trustees can avoid becoming involved in any litigation or that disputes can be settled before they escalate, the guidance on this page should help to clarify what you need to do if you find yourselves involved a claim and where you can find help and support.
If you have any queries in relation to the guidance in this document please contact TMCP Legal for further assistance.