02nd January 2014
Are Charities Vulnerable to Litigation from Applicants?
The recent case of Rosenzweig v NMC Recordings Ltd (4 December 2013) shows it is quite easy for an applicant to clear the initial hurdle to litigation by showing the Court he or she is an ‘interested person’.
Mr Rosenzweig was a composer whose music was submitted several times to NMC Recordings Limited (a music promotional charity) and each time was not taken up by NMC, though it said it acted in good faith.
The Court found Mr Rosenzweig satisfied the ‘interested person’ test to commence litigation, as he was an applicant to the Charity for its services of music promotion. However, the Court also found there was no public benefit to be gained from the litigation, Mr Rosenzweig had no legally sustainable case, and such litigation may destroy the Charity by exhausting its limited resources.
Although Mr Rosenzweig was unsuccessful on merit, the case highlights charities’ potential vulnerability to challenge. Simple defences can be put up however by charities publicising guidance on their decision making process and the criteria applied, stating not every applicant will be successful, and that the trustees are entitled to exercise their own discretion.