Franklin Mint’s counter-lawsuit against the Diana Fund in 2003 personally named all the trustees and was for a sum of “well over a hundred million dollars”, Andrew Hind revealed in his opening plenary at the Trustee Exchange conference today.
Hind used his speech to share with delegates his own personal experiences of trusteeship, “trustee to trustee – not as a lecture from Andrew Hind, former chief executive of the Charity Commission”.
He offered up entertaining and thought-provoking anecdotes from trustee roles at the 2nd Barnet (Parish Church) Scout Group, the Friends of the Barnet Countryside Centre, Mariners, VSO and Unicef, along with governance lessons learned from various other roles at Barnardo’s, ActionAid and National Asthma Campaign.
But the stickiest situation Hind found himself in as a trustee was at the Diana, Princess of Wales Memorial Fund, after it decided to sue the Franklin Mint for breach of image rights – setting off a catalogue of events that Hind described as “a charity traffic accident of immense proportions”.
Hind joined the Fund as a trustee in 1999, a year after the Fund had instigated the lawsuit against Franklin Mint. The Mint had produced a Diana doll which was not licensed by the Fund, and the Fund believed it owned the commercial rights over Diana’s name and image. Hind was one of a number of ‘second-wave trustees’ to join the board.
A six-year legal battle ensued and after the Fund lost, Franklin Mint counter-sued, claiming the Fund had acted maliciously.
“The counter-suit personally named all the trustees, and was for a sum of well over a hundred million dollars,” Hind told delegates. “That was greater than the reserves of the Diana Fund. The killer blow was when we realised that the Fund had not been set up as a limited company, it was merely a charitable trust.
"So the trustees’ personal assets were on the line. For two years I was seriously worried that I was facing a reasonable chance of bankruptcy.
“I wished my due diligence had been better when I agreed to become a trustee,” Hind admitted.
In the end, in 2004 an out-of-court settlement saw the Diana Fund pay £13m to charitable causes agreed by both sides. Hind concluded by relating two lessons learned:
“Despite a lawyer’s optimistic assessment of risk in a case, the worst can and does happen. Nothing in court is guaranteed.
“And, never operate as an unincorporated trust if there is the remotest possibility of the trustees bearing personal risk. That is why I hope the new CIO structure gets going as soon as possible.”
Andrew Hind is now editor of Charity Finance. Trustee Exchange is the annual governance conference associated with Governance magazine and organised by Civil Society Media.
Read Andrew's full speech here.
