Call Us Today

01-4736963

Charity Law-Dealing with the Death of a Charity

Dealing with the Death of a Charity by Joanne McInerney Solicitor & Notary Public

The Irish Times March 2012

Like all bereavements, the end of a charity?s life can be a distressing and complicated time, not least because of the legal pitfalls and governance issues surrounding same.

With the onslaught of the economic recession in Ireland, many charities experiencing a drought in their financial resources and income generating activities have had to deal with the winding up of their charities. The death of a charity can leave donors, beneficiaries, directors and trustees alike reeling in the aftermath with the accountability and governance post-mortem that is bound to be carried out.

The directors or trustees of a charity which has become insolvent or bankrupt today face increasing obligations and responsibilities to make sure that all measures have been correctly adopted to ensure that the members of a charity and its remaining assets are protected and distributed as equitably as possible.

The introduction of the Irish Charities Act, 2009 saw a renewed and clearer level of guidance albeit mandatory for the two main types of charities in Ireland, that of the incorporated charity and the charity governed by trust documentation. The failed enactment to date of this statute however has left an unsatisfactory and arguably discriminatory division between these two types of charities in respect of the directors? and trustees? accountability requirements and the levels of statutory duties to be imposed upon them.

Further to this, although the Charities Act, 2009 sets out the procedures involved within the proposed Charities Regulatory Authority (CRA) for the registration of an Irish charity under S39 (3) of the act together with its regulation throughout its lifecycle under S14 of the act, the statute is silent on the legislative requirements or even guidance for charities at the end of its life. Under the provisions of this new act, the directors or trustees of such insolvent or bankrupt charities will be judged in accordance with the directors of their corporate counterparts and perhaps rightly so.

Under S28 of the new act, the Charities Regulatory Authority can provide such information as is required to An Garda S?och?na, the Revenue Commissioners, the Director of Corporate Enforcement or such other person, in order to ensure that a charity can be investigated and monitored under the act where such evidence of alleged wrongdoing has come to light. It will be an offence under S10 of the act for an officer of the charity i.e. a director, trustee or such other person as holds themselves out as an officer of the organisation to breach their new statutory duties. Annual auditing and compliance with accounting standards will be mandatory under S49 of the act and proper books of account must be kept for up to six years following the dissolution of a charity in the event that an order is made for their production by the CRA under an investigation pursuant to S47 of the act.

Remarkably though, without the enactment into law of this new statute to date and for the foreseeable future, a lacuna now exists between the statutory requirements of the directors of an incorporated charity and the trustees of an unincorporated charity. Are the directors of incorporated charities presently to be judged by default under the rigours of the Companies Acts 1963 as amended while their unincorporated trustee counterparts today face no such scrutiny unless a case can be made against them under the common law? ?The statutory duties of a charity?s directors were further constrained by the Companies Acts for breach of these duties, under S150 and S160 of the Companies Act 1990, where mechanisms were brought forward to disqualify and restrict directors for breaching their duties.

So what now of the statutory duties for the trustees of a charity trust and in particular during the termination of its trust deed? Without the enactment of the Charities Act, 2009 how are the trustees of a charity trust to be measured and sanctioned for breaches of their duties? The Law Society of Ireland in its comprehensive report, ?Charity Law, the case for reform? in July 2002 stated that, ?The duty of care owed by trustees or directors of a charity should be a standard one, and should be adhered to whether the charity is an unincorporated association, a trust or a company limited by guarantee. We recommend that this duty of care should be statutory.? ?Without the enactment into law of the new Charities Act 2009, are the statutory duties and accounting requirements of the trustees of unincorporated charities to be defined under the archaic Trustees Act of 1893? If that?s the case then it would follow that a trustee of an unincorporated charity may not have to answer to any authority other than the Revenue Commissioners for perhaps overstepping its charitable purpose in the course of its activities. Such a trustee can effectively operate without the statutory threat of restriction, disqualification, summary or indictable penalty for breaching their duties.? The enactment into law of the Charities Act 2009 has been fraught with political and financial obstacles which have resulted in a quintessentially Irish solution to same, that of burying the head in one?s sand, while every other country in the common law world moves on with their reforms of charity law and governance.

 

Whatever the chances for directors of an incorporated charity efficiently and properly winding up its organisation, this is hardly a satisfactory position for the trustees of the unincorporated charities, which according to the Irish Nonprofits Knowledge Exchange report of January 2012 make up 32% of the approximately 12,000 charities registered with Revenue Commissioners for tax exemptions in Ireland. In the instance where a culpable trustee of a charity presents himself to his insurer having engaged in fraudulent or incompetent practises will his insurance company be entitled to void the extension of their professional indemnity insurance cover to him on the basis that he has breached some ambiguous common law duty? ?Such an existence is a precarious one for a trustee where without the governance of legislation to monitor and restrict ill informed actions on their part or without a statutory defence to rely on for such actions, a trustee could effectively be left with just enough rope to hang himself, and in such circumstances may not be entitled to rely on the legal maxim of ignorantia juris non excusat.

 

 

Injunction granted against landlord

The landlord of a well-known Dublin guesthouse has barricaded himself inside the premises and has refused to let anyone in, the High Court heard yesterday.

Desmond Killoran, who owns the Leeson Bridge Guest House at Upper Leeson Street, Dublin, last week occupied the guesthouse’s reception hall and has nailed shut the front and rear doors and the emergency fire exit.

The court heard Mr Killoran claims the terms of a lease agreement he entered into with the guesthouse’s operator, Derek Byrne, has been breached. Mr Byrne, who for the last number of years has operated the 19-room guesthouse which caters for 38 guests and employs about nine staff, denies that claim.

Mr Byrne, in an affidavit, said Mr Killoran has taken this action in a bid to prevent receivers, appointed last month by AIB over Mr Killoran’s interest in the premises, from collecting rent due under the terms of the lease agreement.

Mr Byrne has gone to the High Court because Mr Killoran’s actions are “hugely embarrassing, and damaging to the reputation of the premises”, which “cannot function” while Mr Killoran remains present.

He also claims Mr Killoran’s actions are illegal and unlawful, and Mr Killoran has refused his request to vacate the premises.

Yesterday Mr Justice Colm MacEochaidh granted Mr Byrne a temporary injunction ordering Mr Killoran to vacate the premises and restrained him from occupying it any further. The order, which was granted on an ex-parte basis (one side only), was made returnable to a date later this month.

In his affidavit Mr Byrne, of Ratharney, Abbeyshrule, Co Longford, said he leased the premises from Mr Killoran in 2010. The lease was for three years and rent was set at €126,000 a year.

The rent was paid on a monthly basis, and all payments were up to date.

Last month AIB appointed a receiver over Mr Killoran’s interests in the premises. Mr Byrne was informed that as a result any rent due would have to be paid to the receiver.

Mr Byrne said his staff and the guests have been effectively locked out after Mr Killoran entered the premises on January 2nd last

Revenue Commissioners – Property Tax

The Revenue Commissioners have expressed confidence there will be a complete register of the 1.6 million-plus households liable for local property tax by the time the new charge becomes payable in July this year.

Revenue has indicated it will use additional powers under property tax legislation to obtain information from utility providers such as gas and electricity companies that will supplement its own database.

It will also use registry data from last year’s household charge, data from the non-principal private residence annual charge, and information supplied by the private residential tenancies boards.

“This will allow us to contact liable persons in March 2013,” stated Revenue on its website, indicating the register will be completed by the end of 2013 and virtually all residential properties in the State will be captured.

The disclosure suggests that Revenue will overcome one of the obstacles faced by the Local Government Management Agency when administering the €100 household charge last year – absence of a comprehensive database of all residential properties.

Revenue valuation

Every household liable for the new property tax will be contacted in March and supplied with a comprehensive information booklet about how to file the tax return on the property or properties owned. It will include Revenue’s estimate of the amount of tax due on the property.

But Revenue emphasised yesterday that it expects people to self-assess what their property is worth and what they owe in stamp duty.

They suggest they could base this on the register of residential property sales, published by the Property Services Regulatory Authority. The information is based on the Revenue’s own data on stamp duty.

However, if a person fails to submit a return, Revenue’s estimate of the tax will become payable by default, when it falls due on July 1st.

“The estimate will automatically be displaced on submission of the return containing the self-assessed amount,” says Revenue.

Householders will have to file the property tax return to Revenue by May 7th – or May 28th if filing electronically.

Appeals

A Revenue spokeswoman said yesterday that Revenue would accept the self-assessed value if the figure was arrived at in an honest manner. “If you follow Revenue’s guidance honestly, we will accept your property value assessment. If Revenue has reason to believe that the amount you have declared on your return does not reflect the market value of your property, we may raise an assessment for a different amount.”

If a household does not agree with the assessment made by Revenue, it has the right to go to the Appeals Commissioner.

However, the spokeswoman said Revenue did not expect, initially, to challenge values other than in a small number of cases: “The focus of Revenue’s initial compliance programme is likely to be on making sure the register is as complete as possible.”

Penalties

Penalties for those who fail to pay the tax will be as severe as for other forms of tax default. “If you don’t send back the LPT return form and your self-assessment of your tax liability, the tax set out in the Revenue estimate will be collected using normal collection or enforcement options – deduction at source, sheriff, court action, attachment orders,” according to the website.

“Interest and penalties may also apply. In circumstances where standard enforcement is not applied for whatever reason, then a charge will be put on your property. You won’t be able to sell it without paying the tax together with interest and, where appropriate, penalties.”

Improvements

The website does not state if a house similar to others on a street but where substantial improvements had been carried out would attract a higher tax, but the implication is that it would.

The assessment of the value of the house will remain until 2016, irrespective of any changes in the market or any improvements on the property.

That suggests that improvements, extensions or alterations carried out prior to 2013 will affect the value of the property for tax purposes.

Six-month bill

Householders will pay the tax for only six months in 2013. That will cost €202 this year (€404 in a subsequent full year) for a house worth €200,000-€250,000

Man fined €1,250 for careless driving in fatal crash

A farmer who ran over an elderly German tourist with his 1980- registered tractor at one of the country’s best-known tourist spots was fined €1,250 yesterday.

At Ennis Circuit Court, Judge Gerald Keys said that banning John Boyce (57), Moyhill, Cratloe, Co Clare, a father of two, from driving would be akin to taking tools from a tradesman.

At the court earlier last month, a jury unanimously found Boyce guilty of careless driving relating to the fatal crash of his Massey Ferguson tractor into Inge Schmidt (76) at a pedestrian crossing at Low Road, Bunratty, on October 29th, 2010.

Boyce was tried on the charge of dangerous driving causing the death of Ms Schmidt but the jury unanimously cleared him of that.

At the sentencing hearing yesterday, Judge Keys said there were a number of aggravating factors.

These included the condition of Boyce’s tractor, in that the tractor had no wipers on a rainy day, and that Ms Schmidt was crossing a well-signed pedestrian crossing on a straight stretch of road.

The pedestrian crossing had beacons in operation and Boyce said he did not see Ms Schmidt at all, despite a motorist travelling behind him who said that she did see her crossing the road and could not understand why he did not stop.

Judge Keys ordered that Mr Boyce could not drive the tractor that was involved in the crash until all of its faults were corrected to the satisfaction of gardaí.

Birth injury case settled

A young boy who allegedly suffered a shoulder injury during his birth at a Cork hospital is to receive €275,000 under a settlement of his High Court action against the HSE.

Seán Daly (8), Kinvara Park, Ballyvolane, Cork, had, through his father Denis, alleged he suffered the injury during his delivery at St Finbarr’s Hospital, Cork, on October 8th, 2004.

Yesterday, Dr John O’Mahony SC, for the child, told Ms Justice Mary Irvine the settlement was made without admission of liability.

High Court Action for Damages

A WOMAN who fell on her way into a parish hall to vote in a referendum has lost her High Court action for damages over the incident.

Anne Cassidy (68), Crickstown, Ratoath, Co Meath, sued Fr Philip Gaffney, the parish priest of Curraha, Ashbourne, Co Meath; Mary O’Malley, returning officer for East Meath in the referendum; and the Department of Environment, Heritage and Local Government as the owner/occupier of the hall on the day of the accident.

The High Court was told Mrs Cassidy, a housewife, went with her husband Patrick to Curraha parochial hall on October 2nd, 2009, to vote in the second Lisbon referendum.

At the entrance door, she tripped and fell when her toe caught on a raised weather strip at the step into the hall, the court heard.

Mrs Cassidy claimed she suffered injuries and the defendants were negligent in not foreseeing the danger and not providing warning signs about it.

The defendants claimed she failed to keep a proper lookout and was the author of her own misfortune.

Yesterday, Mr Justice Eamon de Valera dismissed her action saying Mrs Cassidy, who had used the hall to vote on a number of occasions previously, unfortunately did not take enough care this time and tripped.

“There is no such thing as a step that somebody will not fall over,” he said.

There was nothing about this particular step, which had been crossed over by thousands of people in the past, that would have alerted the authorities “to view it as a danger or trap”, he said.

“There must be a sense of reality and proportion in all of these cases and to find this as being blameworthy would be to lower that sense of reality.”

As Mrs Cassidy had not proven liability, the judge said he must dismiss the case and award costs against her.

From photos he had seen of the premises, built in the 1970s, it was well maintained and built with professional expertise, the judge also said.

He did not accept there was anything unusual about the step and said similar steps were commonly found in buildings.

Earlier, Mrs Cassidy told the court that, after the accident, her husband brought her to Blanchardstown hospital where she underwent X-rays that did not reveal any breakages.

She claimed she was left with serious pain in her left shoulder, back, hip and ankle and remains on painkilling medication.

She did not undergo an MRI scan because she is claustrophobic and declined painkilling injections for her shoulder because she did not like needles, she said.

Cross-examined by senior counsel Michael Byrne, for the defendants, Mrs Cassidy said she previously sued the council over a fall in Navan, when she suffered injuries to her nose and face.

 

Man told to pay assault victim ?9,000

A MAN who walked next door and punched his neighbour in the mouth has been told by a judge to pay him ?9,000 compensation.

Siobhán Gaffney, for Barry Matthews, told the Circuit Civil Court that her client admitted the assault on electrician Andrew McDermott in July 2009.

Mr McDermott (48), St Conleth’s Road, Walkinstown, Dublin, told her that Matthews, who lived next door, had made some allegation about bullying involving their two sons.

“There was a knock at the door and I went out to answer it,” Mr McDermott said.

“Barry Matthews was standing at the door and punched me in the mouth.”

Mr McDermott told his barrister Abdulla Morgan Kamber that his left upper lip had been lacerated “through and through”. There had been blood everywhere and on the hall floor, which he did not want his children to see.

He had gone to St James’s Hospital, Dublin, where he had received six stitches in a 1.5cm cut in his lip.

He had been detained until the following day but he had lost only one day at work because of the injury.

Later he had lost several days from work because of appearances he had to make in court.

Mr Morgan Kamber told Mr Justice Matthew Deery that liability had been conceded in the case and it was for the court to determine damages.

He said agreed medical reports revealed that the laceration traversed the vermilion border of the lip which made the permanent scar much more obvious to the casual onlooker.

Ms Gaffney said the action of her client had hugely affected his life.

Matthews, she said, had left his home and obtained rented accommodation.

He had undergone marital upheaval since the incident.

Awarding Mr McDermott €9,000 damages against his former neighbour, Mr Justice Deery said the incident had been unfortunate

New Land Registry Fees Order Commencing 1st December 2012

On 28 September, 2012, the Land Registration (Fees) Order 2012 was signed by the Minister for Justice and Equality. This Order revokes the Land Registration (Fees) Order 1999 and introduces new fees for Land Registry services.

The Land Registration (Fees) Order 2012 also introduces new bands for the relevant fees relating to the consideration (value) of transfers on sale and includes details of fees for new services which are now offered by the PRA.

In general, fees for registrations and services which previously cost €25 and €85 will increase to €40 and €130 respectively. While direct comparisons of the scale fees are not possible due to a redrawing of the value bands, the registration fee on the transfer of an average priced house, based on current CSO information, will be €600 in the context of the new fees order.

The PRA is obliged by legislation to charge fees at an appropriate level to cover costs of the provision of services. It should be noted that there has been no increase to Land Registry fees since 1999.

The Fees Order will come into operation on 1st December 2012

Woman bringing first case over allegedly defective hip implants

A woman who had two hip replacement operations intends to bring what is expected to be the first of many cases over allegedly defective hip implants.

Irene Pierson is one of thousands of people who had DePuy Orthopaedics hip joints fitted in Irish hospitals before DePuy ordered a worldwide recall of the product in 2010. Yesterday the High Court was told Ms Pierson intended to bring an action against DePuy Inc and related companies, which allegedly supplied and manufactured the hip replacement product; Johnson Johnson Inc, which owns DePuy Inc; and the Health Services Executive.

Ms Pierson alleges she entered into a contract with the HSE in March 2007 to have a right hip implant manufactured by DePuy fitted and also entered into a contract in September 2008 to have a left hip implant fitted. It is alleged the DePuy products were not of merchantable quality and have both begun to malfunction. She claims the defendants have acted in breach of contract and is seeking damages.

It is claimed she has a good cause of action on grounds including that, in October 2010, she was informed by letter she had been fitted with a recalled DePuy hip in Navan General Hospital, Co Meath.

Ms Pierson’s solicitor, Edward McGarr, yesterday secured an order allowing him serve the proceedings on intended defendants who are outside the jurisdiction.

Former garda awarded €300,000 over injury

A man who was punched in the head while a serving garda as he released a man from a Garda station was awarded more than €300,000 in damages by the High Court yesterday.

Ms Justice Mary Irvine said James Lynn, who was stationed at Castlebar station but has since been discharged from the Garda due to ill-health, had lost the career he fought so hard to get into.

As a result, Mr Lynn had lost his status in society and his injuries affected him every day, she said. The case was brought under the Garda Compensation Act by Mr Lynn who had been attached to Castlebar station at the time of the assault on June 23rd, 2001.

The court heard Mr Lynn released a prisoner from holding cells who then went to the day room. Mr Lynn later escorted him to the foyer.

As the man stepped on to the porch, he suddenly turned around and punched the garda in the left eye and forehead area, the court was told. The severe blow made Mr Lynn stumble backwards.

Ms Justice Irvine said the area around his eye became swollen and bruised, which lasted a number of weeks. He suffered headaches linked to post traumatic stress disorder.

The judge found Mr Lynn still suffered anxiety. She was satisfied he was not “a malingerer” but a committed and conscientious member of the force unlikely to have given up his career were it not for the injury. The €301,242 award includes compensation for loss of earnings to date and into the future.

The court heard Mr Lynn received compensation in the past over two separate assault incidents in the course of duty.