Politically, the idea of the North Kensington Amenity Trust was so beguilingly simple that it has since become a template for similar ventures around the country. With a staff of 60, a salaried director on more than £60,000 a year and a turnover of £2.8m, it was the founding inspiration for the Development Trusts Association, with 200 members from Devon to Northumberland and assets of more than £100m. It is a celebrated example, moreover, of a £30 billion "grey economy", embracing more than 180,000 registered charities and an estimated million trustees.
As charities do, it started well, with ideals that were hard to fault. In building the Westway, the Department of Transport left 23 redundant acres around Ladbroke Grove tube station, some ready-roofed, like railway arches, others open spaces. "What we wanted was facilities aimed at the poor community, especially children," John O'Malley, the secretary of the action group that founded the charity, told me. "What really grew out of it was playgroups."
In February 1971, the management committee of 15 trustees adopted legal objectives that are still in force today: "(1) the advancement of education; (2) the provision of facilities for recreation or other leisure-time occupation in the interests of social welfare, with the object of improving the conditions of life of the said inhabitants; (3) assisting charitable institutions established for the benefit of the said inhabitants; (4) in the advancement of education, but not further or otherwise, the trust may provide assistance to children and young persons."
Progress was slow, but by 1976 the trust had built a community centre - the Acklam Hall - in the premises that are now Subterania. There was a nursery, stables, an administration building, offices and space for stallholders and small businesses. The idea was to create a mix of public services and private enterprise - the rental from which could be garnered by the charity to help address the neighbourhood's needs.
Those needs were many - then as now - with Golborne ward, in which the nightclub sits, still one of the most challenged in Britain. For all the popular image fostered by the movie Notting Hill, hidden up backstreets such as Acklam Road is deprivation rarely dwelt on in films. Unemployment last year hovered around 13%, and twice as many people live in public-sector housing as own or privately rent their homes.
For a while there was progress, but then renewed conflict erupted as all eyes turned to the land. Although North Kensington is a solidly Labour area, seven or eight of the management committee were nominees of the Tory-dominated borough council, controlled from wealthy South Kensington, Chelsea and Knightsbridge. And in 1976 they appointed as trust director Roger Matland, then a 31-year-old charity worker with a degree in psychology and a new agenda for the trust's development.
Gradually, under Matland, the charity sidelined its founding ideals and switched from serving the likes of Mrs Kelly to creating a luxury leisure empire. In 1988, Subterania (£8 admission) was rented to the Mean Fiddler group (Vince Power says: "You could say they gave it to me for nothing"), followed by ambitious expansion, using public grants and loans, to build an indoor tennis club (adults £15 an hour), a members-only fitness club (£100 joining fee, plus £45 a month), and an upscale cocktail lounge (seared wild salmon and roasted red pepper brochette on kizami and black pasta mesh with herb tahini, £11.50). In short, the new plan was to develop the property for the affluent, like a modern-day enclosure of common land.
The justification was to generate income for charitable purposes, and day-trip visitors were dazzled. In 1991, the trust's 20th anniversary year, the Prince of Wales, who would later become a hands-on supporter, declared that it had "forged ahead with a wide-ranging programme for the economic and social benefit of local people."
But even amidst such courtly praise, around the motorway - which surges across the roof of Subterania - the neighbour's unrest was festering. "It's disgusting," Mrs Kelly, who was president of the local Swinbrook tenants' association, told me. "As far as the community around here, we don't get any benefit from the amenity trust, and nobody can tell you any different."
There were no celebrations in February this year for the trust's 30th anniversary. When I called the urbane, Gitane-smoking Matland, now 56, he told me he was "busy" and I would get "a better story" if I contacted him again in a year. And after a series of complaints to my editor, we ended up in a protracted written duel between the charity's lawyers and ours.
I didn't at the time reveal the trigger for my interest: a memo I saw from Matland to the trust's solicitors, the firm of Sinclair Taylor & Martin. It read like something from a John le Carre novel, and when I checked it out it made me wonder if anybody policed charities at all. Without sharp-eyed shareholders, or the political accountability of public authorities, it seemed that the world of trustees and professional staff could let the weirdest situations arise.
"At about 10.45 on Monday 9 November 1998," Matland wrote. "I was driving down Golborne Road when I saw Lyn Hardy-Smith transferring goods from a red VW saloon across into his cafe called Havana. I parked at a discreet distance away, walked back and wrote down the registration number, which is E513 PBP. I have asked Janice to obtain the usual from Swansea."
When I found him, it turned out that Hardy-Smith was a local activist, and former bicycle-shopkeeper, who had been priced off his stall by the trust's leisure plans, and who in 1987 had accused Matland of dishonestly influencing a £180 Bloomsbury Court case brought against him. In response, the charity had sued him for libel and, 14 years later at central London County Court, is attempting to seize his family house to recover its legal costs. In an action "that the property be sold notwithstanding that the respondents refuse to consent to the said sale," the charity is now looking to recover from the bicycle man almost £43,000.
Hardy-Smith - 57, slim, grey and nervous - had acted like a fool, making an emotional accusation he had no prospect of standing-up. After a High Court writ was issued against him in 1990, he apologised through solicitors, offered to make an undertaking in court and agreed to pay "reasonable costs". But his apology was rejected as "far from unreserved" - and though the alleged libel was only made in a private letter to the trust's chair, the trust went on in 1992 to throw £30,000 of its charitable funds at defending "the professional repute of its staff".
It was a vindictive action, which broke Hardy-Smith. The only evidence I found of anybody being seriously damaged by the episode is in a letter from Hardy-Smith's doctor saying that he had been treated for stress and depression "caused by the protracted litigation". And since the management committee had paid for the lawsuit, evidently nobody believed what Hardy-Smith said in the first place.
What most bothered me here was the evident lack of charity to this man. Why sledgehammer this particular walnut? A second trust document put me on the road: the essential sting of the allegation seemed to be true. Despite feting royalty. Matland was, on the face of it, prepared to use dishonest tactics to achieve less than charitable ends.
The second document was written the day after Matland's memo to Sinclair Taylor & Martin, and concerned the red VW in Golborne Road - about a quarter mile from trust land. In an apparent bid to seize the vehicle to pay legal bills, Matland, using staff member Janice, wrote to the Drivers and Vehicle Licensing Centre in Swansea, falsely claiming it was somewhere else: "Red Golf VW saloon - E313 PBP... The above vehicle is parked on Trust land and we wish to ask the owner to remove it. I would be most grateful if you could supply me with the name and address of the owner as of today's date so that I may write to them."
Hardy-Smith - now unemployed and suffering from diabetic hyperglycaemia - reported this deception to the data protection registrar and complained to the trust's chair, Judge Gerald Gordon, 55, who sits at the Old Bailey and recently presided over the fraud trial of John "Goldfinger" Palmer. Gordon, who has headed the management committee since 1993 and is a former Tory deputy leader of the borough council, took no action, but merely replied to the bicycle man that if the registrar made "any inquiries of the trust, we will, of course co-operate."
A one-off aberration? At first I thought, maybe. Then other conflicts emerged, which have caused even senior Tories to express dismay about the charity. James Arbuthnot, a former Kensington councillor and chief whip in William Hague's shadow cabinet, for instance, wrote to Matland three years ago saying he remembered the charity with "a curious mixture of loathing and fascination".
Some of the most potentially inflammatory clashes have been with elements of the local black community. In 1996, for instance, local steel bands who used to park two floats on unused trust land, 50 yards from Subterania, were evicted in a protracted lawsuit that cost the musicians more than £10,000. The charity then erected a 10ft steel fence, using grant money, which kept them out. Then last summer there was more controversy when the trust banned the Notting Hill Carnival from two 40-by-20 yard plots of paved land at the epicentre of the festival zone. And, yards from where newsagents once sported "No coloureds" postcards, six stalls traditionally set out each year on Acklam Road - by now elderly Afro-Caribbeans - were prevented by police, on the charity's orders, from selling "a bit of food".
Such actions have sparked fury among the trust's black neighbours - who incidentally got up a petition in 1995 about aspects of the nightclub's door policy. "I don't want to say much in case I get in trouble," said Mrs Kelly, who said she bit her tongue after hearing what happened to Hardy-Smith. "They can take me to court, but I haven't got any money, so they won't get anything."
The area's Labour councillors say they are worn out by the quarrels, and appeals to the trustees get nowhere. After a painter who decorated the charity's offices in 1999 complained to Gordon that it appeared to be attempting to avoid proper payment for the work that it had ordered from him, the judge responded: "Allegations of dishonesty if untrue are libellous and if made in relation to a person's employment are actionable without proof of damage." The painter caved in to a "consent order", abandoning his claim for £1,000 at Lambeth County Court, with an unusual clause demanded by the trust: "That neither party shall discuss the matter with third parties."