THE CHARITIES ACT (NORTHERN IRELAND) 2008
THE CHARITIES ACT (NORTHERN IRELAND) 2013
THE CHARITY TRIBUNAL RULES (NORTHERN IRELAND) 2010
The Charity Tribunal for Northern Ireland
Reference: 21/14 and 25/14
Decision taken by Adrian Colmer (Chairman),
Paul Artherton; Delia van der Lenden following a hearing in public on
10 and 16 November 2016
THE CHARITY COMMISSION FOR NORTHERN IRELAND
THE CHARITY COMMISSION FOR NORTHERN IRELAND
The decision of the Tribunal is to dismiss the Appellants’ appeals against the decision of the Respondent, made under Section 96 of the Charities Act (Northern Ireland) 2008, to give its consent to alterations the constitution of Lough Neagh Rescue Limited.
1. This is the record of the decision made by the Tribunal in respect of two related appeals, one brought by Mr Trevor McKee, and the other brought by Mr Joseph Hughes (“the Appellants), against the decision of the Charity Commission for Northern Ireland, (“the Respondent”), by which the Respondent gave its consent, under Section 96 of the Charities Act (Northern Ireland) 2008 (“the 2008 Act”), to alterations in the constitution of a charity known as Lough Neagh Rescue Limited (“the Charity”).
2. The impugned decision was taken some considerable time ago in September 2013. There has been considerable delay in bringing these appeals to a conclusion before the Tribunal. On the one hand, the fact of the Respondent’s having made the impugned decision only came to the attention of Mr McKee some time after the event. On the other hand, the prosecution of the Appellants’ appeals, by agreement, was effectively put into abeyance pending the outcome of other proceedings concerning the Charity.
3. Upon the hearing of the appeals, the Appellants represented themselves, and the Respondent was represented by Ms Yvonne Bell, Solicitor. The Tribunal is grateful to the parties for their helpful oral and written submissions.
4. During the course of the hearing, the Tribunal heard evidence, on behalf of the Appellants, from the Appellants themselves, and from Mr Mark Cahoon and Mr William Duggan; and on behalf of the Respondent, from Ms Paula McGahey.
5. The appeals were heard on 10 and 16 November 2016. The parties provided written closing submissions on 30 November 2016. Each party responded to the other party’s closing submissions on 7 December 2016. Mr McKee provided an additional submission on 13 November 2016 which specifically addressed the issue relating to the proxy votes. On 25 January 2017, one of the witnesses in the case, Mr Gregory Burke, communicated with the Tribunal, by way of an application to admit a further witness statement and documents. Thereafter, the panel met to consider its decision.
The relevant legislation
6. So far as is relevant, Section 96 of the 2008 Act provides as follows:
(1) Where a charity is a company or other body corporate having power to alter the instruments establishing or regulating it as a body corporate, no exercise of that power which has the effect of the body ceasing to be a charity shall be valid so as to affect the application of
(a) any property acquired under any disposition or agreement previously made otherwise than for full consideration in money or money's worth, or any property representing property so acquired,
(b) any property representing income which has accrued before the alteration is made, or
(c) the income from any such property as aforesaid.
(2) Where a charity is a company, any regulated alteration by the company
(a) requires the prior written consent of the Commission, and
(b) is ineffective if such consent has not been obtained.
(3) The following are “regulated alterations”:
(a) any alteration of the objects clause in the company's memorandum of association,
(b) any alteration of any provision of its memorandum or articles of association directing the application of property of the company on its dissolution, and
(c) any alteration of any provision of its memorandum or articles of association where the alteration would provide authorisation for any benefit to be obtained by directors or members of the company or persons connected with them.
(4) For the purposes of subsection (3)
(a) “benefit” means a direct or indirect benefit of any nature, except that it does not include any remuneration (within the meaning of section 88) whose receipt may be authorised under that section; and
(b) the same rules apply for determining whether a person is connected with a director or member of the company as apply, in accordance with section 89(5) and (6), for determining whether a person is connected with a charity trustee for the purposes of section 88.
7. As appears below, the Appellants made a point about whether the Respondent, in taking its decision to give consent to the alteration under Section 96(2), acted in accordance with the statutory provisions set out in paragraph 9 of Schedule 1 to the 2008 Act. In short, the Appellants contended that the consent was improperly given by a member of the Respondent’s staff, rather than the Respondent itself or a committee acting on its behalf. Paragraph 9 of Schedule 1 is in the following terms:
In determining its own procedure the Commission may, in particular, make provision about (a) the discharge of its functions by committees (which may include persons who are not members of the Commission); (b) a quorum for meetings of the Commission or a committee.
8. In this context, the parties also drew the Tribunal’s attention to Section 19 of the Interpretation Act (Northern Ireland) Act 1954 (“the Interpretation Act”). Section 6(8) of the 2008 Act provides that, subject to Schedule 1 to the 2008 Act, Section 19 of the Interpretation Act applies to the Respondent. Section 19 of the Interpretation Act is in the following terms, so far as is relevant:
(1) Where an Act passed after the commencement of this Act contains words establishing, or providing for the establishment of, a body corporate and applying this section to that body those words shall operate:
(a) to vest in that body when established: …
(v) the right to regulate its own procedure and business; and
(vi) the right to employ such staff as may be found necessary for the performance of its functions;
The issues for determination
9. At this point, it is convenient to set out the matters which the Tribunal was called upon to decide. There is necessarily some overlap between these issues which the Tribunal summarises as follows:
a. Should the Respondent’s consent to the alterations to the Articles of Association of the Charity stand? More specifically, should the Appellants’ appeals be dismissed, or should the appeals be allowed, the Respondent’s consent be quashed, and the matter be remitted to the Respondent? (This is referred to as “validity of consent issue”).
b. Was the consent given by the appropriate office holder within the Respondent?
c. Should the papers in the case be sent to the Attorney General?
d. Should the Tribunal receive further evidence on behalf of the Appellants?
The validity of consent issue
10. It is important to understand the alterations to which the Respondent gave its consent. This is best illustrated by first setting out the original provisions, and then setting out the Articles to which the Respondent gave its consent.
11. The provisions, in their original state, appeared in the Charity’s Memorandum of Association, and, so far as relevant, read as follows (the descriptions in square brackets are added by the Tribunal for ease of identification in this decision, but do not appear in the original text):
[Objects] 3. The Company’s objects are as follows:
(i) To provide and maintain apparatus, equipment, vehicles and vessels for the saving of life and assistance of persons in distress within Northern Ireland (the area of benefit);
(ii) to provide adequate arrangements for the secure and efficient search and rescue of any person or persons endangered by accidents or natural hazards within Northern Ireland; and
(iii) to train members to achieve these objectives.
[Members and Directors’ Benefits] 4. The income and property of the Company shall be applied solely towards the promotion of its objects as set forth in the Memorandum of Association and no portion thereof shall be paid or transferred, directly or indirectly by way of dividend, bonus or otherwise howsoever by way of profit, to members of the Company and no member of its Board or Directors shall save as below receive any remuneration or other benefit in money or money’s worth from the Company provided that nothing herein shall prevent any payment in good faith by the Company:
(a) Of reasonable and proper remuneration to any member, officer or servant of the Company not being a member of its Board of Directors for any services rendered to the Company;
(b) Of interest on money lent by any member of the Company or of its Board of Directors at a r rate per annum not exceeding 2% less than the base lending rate prescribed for the time being by the Bank appropriate to the Company or 3% whichever is the greater.
(c) Of reasonable and proper rent from premises demised or let by any member of the Company or if [sic] its Board of Directors.
(d) To any member of its Board of Directors reasonable out of pocket expenses.
[Dissolution] 7. If, upon the winding up or dissolution of the Company there remains after the satisfaction of all its debts and liabilities any property whatsoever the same shall not be paid to or distributed among the members of the Company but shall be given or transferred to some other body, institution or institutions charitable in law and having objects similar to the objects of the Company which shall prohibit the distribution of its or their income and property amongst its or their members to an extent at least as great as hereinbefore mentioned as may be determined by the members of the Company at or before the time of dissolution and if and insofar as effect cannot be given to such provision then to some other charitable object.
12. The Articles, in the altered state, read as follows:
(4) The Company’s objects are specifically restricted to the promotion of the public benefit by the relief of human suffering and distress from disaster on inland waters, the advancement of education and the protection and preservation of lives in the Lough Neagh area and its adjacent waterways and rivers and such other areas of Northern Ireland and other countries as the Directors may from time to time think fit (hereinafter called “the area of benefit”) without distinction of age, gender, disability, sexuality, orientation, nationality, ethnic identity, political or religious opinion, by associating the statutory authorities, emergency services, voluntary organisations and the inhabitants in a common effort to improve the conditions of life for the benefit of the inhabitants and in particular:
(a) To protect and preserve good health and life by the provision and maintenance of suitably trained specialist waterborne search and rescue teams to assist in the search and rescue of persons missing or endangered by accidents or natural hazards in the area of benefit and adjacent land both independently and in association with the full emergency services and other statutory and voluntary aid agencies;
(b) To provide and maintain apparatus, equipment, vehicles and vessels for the saving of life and assistance of persons in distress within the area of benefit;
(c) To advance the education of the public in all matters relating to inland water safety and awareness, waterborne rescue, first aid and the safe and appropriate use of outdoor environments;
(d) To advance promote and further the conservation maintenance and protection of features of landscape in the area of benefit with geographical, physiographical or amenity value.
Members and Directors’ benefits
(8) (a) A member, director or connected person may receive a benefit from the company in the capacity of a beneficiary of the company.
(b) None of the income or property of the company may be paid or transferred, directly or indirectly, by way of a dividend, bonus or otherwise howsoever by way of profit to any member, director or connected person, of the company. Provided that nothing herein shall prevent any payment in good faith by the company:
(i) Of reasonable and proper remuneration for any services rendered to the company by any member, officer or servant of the company who is not a director of the company.
(ii) Of interest on money lent by any member, director or connected person at a reasonable and proper rate per annum not exceeding 2% less than the base rate prescribed for the time being by a clearing bank selected by that board of directors or 3%, whichever is the greater.
(iii) Of reasonable and proper rent for premises demised or let by any member, director or connected person provided that the director concerned shall withdraw from any meeting at which such a proposal or the rent or other terms of the lease are under discussion.
(iv) Of fees, remuneration or other benefit in money or money’s worth to a company of which a member of the board of directors may be a member holding not more than one hundredth part of the capital of that company.
(v) To any directors of reasonable and proper payment of out of pocket expenses.
(c) No director or connected person may buy any goods or services from the company on terms preferential to those applicable to other members of the public.
(d) “Company” shall include any other company in which the Company holds more than 50% of the shares; or controls more than 50% of the voting rights attached to the shares; or has the right to appoint one or more director to the board of the other company.
(101) The members of the company may at any time before, and in expectation of, its dissolution resolve that any net assets of the company after all its debts and liabilities have been paid, or provision has been made for them, shall on or before the dissolution of the company be applied or transferred in any of the following ways:
(a) Directly for the Objects; or
(b) By transfer to any charity or charities for purposes similar to the Objects; or
(c) To any charity or charities for use for particular purposes that fall within the Objects.
(102) Subject to any such resolution of the members of the company, the directors of the company may at any time before and in expectation of its dissolution resolves that any net assets of the company after all its debts and liabilities have been paid, or provision made for them, shall on or before dissolution of the company be applied or transferred:
(a) Directly for the Objects; or
(b) By transfer to any charity or charities for purposes similar to the Objects; or
(c) To any charity or charities for use for particular purposes that fall within the Objects
(103) In no circumstances shall the net assets of the company be paid to or distributed among the members of the company (except to a member that is itself a charity) and if no resolution in accordance with article 101 is passed by the members or the directors the net assets of the company shall be applied for charitable purposes as directed by the Court or the Charity Commission.
The early part of the hearing: application to adjourn
13. At the outset of the hearing, the Appellants indicated that they wished to open the case and to give their evidence first. Ms Bell had no objection to that course. Mr McKee, on behalf of both appellants, raised two preliminary points: (i) a matter relating to documents; and (ii) a matter relating to the jurisdiction of the Charity Commission. As regards issue (i), it emerged after some discussion that the documents were agreed and no determination was required.
14. As regards issue (ii), Mr McKee a submitted that the Respondent’s decision was fatally flawed because the consent in the instant case had been given, not by the Respondent – i.e. the Commission itself, or a committee with delegated authority – but by an individual member of staff i.e. Ms Paula McGaghey or Mr Kevin Kennedy. Mr McKee drew attention to the legislation i.e. the provisions of the 2008 Act and the Interpretation Act, set out above.
15. By way of responding submissions, and after the Tribunal had risen for a time to allow Ms Bell to take and confirm her instructions, she informed the Tribunal that Ms McGahey had given the consent in the instant case. Ms Bell submitted that this was in accordance with the legislation: decisions did not have to be taken only by the Respondent or a committee with delegated authority. She emphasized that the Respondent had the statutory right and power, both under the 2008 Act and the Interpretation Act, to regulate its own procedure and business. She said that the Respondent had done so by putting in place operational manuals, which detailed the Respondent’s processes and procedures. Ms Bell contended that the decision which the Respondent had made under Section 96 had been made in line with the procedures as outlined by the Board of Commissioners at that time.
16. By way of rejoinder, Mr McKee said it did not matter if policies and procedures had been passed by the Respondent. He said that the consent had been given at the lowest level of authority, by a person who did not have the lawful authority to make that decision. He contended that a body corporate had no inherent power, and no discretionary powers.
17. Mr Hughes submitted that it was imperative that this decision be dealt with as a preliminary issue, and that the papers should be sent to the Attorney General. He submitted that it was just, expedient and economical that the matter be dealt with in this way. Mr McKee and Mr Hughes applied to the Tribunal to adjourn the proceedings in order that the papers in the matter might be sent to the Attorney General.
18. In response to this application, Ms Bell strongly objected to the suggestion that the hearing should be adjourned. She said that it was important to have the issue of the alteration of the constitution decided as soon as possible, in order that the Charity would know what its powers are.
19. At this point, the Tribunal rose to consider the application to adjourn. The Tribunal then sat again to deliver its ruling. The Tribunal refused the application to adjourn as it was important to proceed and dispose of the matters in issue. The Tribunal reserved its decision on whether to refer the matter to the Attorney General.
Mr McKee’s evidence on the validity of consent issue
20. By way of examination-in-chief, Mr McKee adopted his witness statement and gave the following additional evidence to the Tribunal:
a. He said that there were deficiencies in the procedure by which the alteration to the constitution was made: the changes to the constitution had not been properly identified; the venue at which the meeting was held, during which the changes were adopted, had not been a neutral venue, and some members had felt that they could not attend because of safety concerns; at the meeting, it had wrongly been decided to exclude a large number of proxy votes; if the excluded votes had been counted, the impugned changes would have been rejected; the Respondent had been aware that there were to be proxy votes; and the Respondent should have acted to prevent the rejection of the proxy votes.
b. There were a number of versions of the draft changes to the constitution: (a) a version which had emanated from some contact with the Northern Ireland Council for Voluntary Action (“the NICVA version”) circulated on 7 August 2013; (b) a further version, prepared by an officer of the Charity; and (c) a composite version, which was the version that was consented to by the Respondent.
c. Instead of considering the matter over a thirty-day period, the Respondent had considered it too quickly, over two or three days.
d. The Respondent did not publish the consent until November 2014.
e. The question had been raised as to how the proxy votes should be dealt with. Mr McKee suggested that there was a conspiracy between the Charity and the Respondent to reject the proxy votes. He also said that the Respondent had been offering legal advice to the Charity.
f. In her consideration of the application, Ms McGahey had identified a risk that was high: given that risk, she ought to have referred the decision to a higher authority i.e. the Board of the Respondent.
g. There had been no consideration of whether the changes were charitable or in accordance with the law of Northern Ireland.
h. The process had been undertaken in secret. Mr McKee said that there should have been an open and rigorous assessment of risk, and the consent should have been published. He also said that the wider public did not have the chance to consider the changes.
21. The Tribunal asked Mr McKee to explain the nature of the changes and what was the problem with them. In response, Mr McKee referred the Tribunal to his witness statement, which made the following points at paragraphs 37 to 42, which may be summarized as follows:
a. The new objects clause had not been agreed. The redefining of the area of benefit may place undue pressure on the Charity and it may not be realistic to fulfil it. Some traditional areas of benefit, e.g. coastal areas, were excluded. He was concerned about “poaching” areas covered by other organisations.
b. The new object “to advance, promote and further the conservation maintenance of features of the landscape” was “nonsensical” and could give rise to dispute.
c. The amendment to allow payment of fees to companies of which a member of the Charity was a member was unwise and contentious.
d. The amendment to allow payment of assets to members of the Charity which were themselves charities was new, and had not been agreed upon.
22. In her cross-examination, Ms Bell addressed the following points to Mr McKee:
a. Mr McKee had been invited to the meeting on 3 September 2013. Mr McKee initially said that he could not recall, but then accepted that he had received an invitation.
b. When asked whether he was familiar with the articles, Mr McKee said “absolutely not”: he was aware that there were articles and memorandum, and may have referred to them for specific questions, but he did not have an in depth familiarity with them.
c. Ms Bell suggested to Mr McKee that he was responsible for the operation of the Charity under the “original” Articles; Mr McKee accepted that that was correct.
d. Ms Bell put it to Mr McKee that the Respondent had no control over the proxy votes. Mr McKee said that the Respondent gave legal advice, when it was not allowed to do so, as to how the Charity should manage the proxy votes that evening. Ms Bell suggested that the Respondent did not give legal advice, and in fact it had told the Charity to refer to its own legal advice. Mr McKee rejected that suggestion.
e. Ms Bell said that the date, time and location for the meeting to put the articles to its members was a matter for the Charity. Mr McKee said that if the Charity was seeking regulated consent, there should be a proper timetable, with an opportunity to challenge, for example, at an EGM. Mr McKee said that in this case, Charity could not have made arrangements unless there was discussion with the Respondent – which had amounted to unlawful interference by the Respondent.
f. Ms Bell referred Mr McKee and the Tribunal to an email, dated 14 August 2013, which Mr McKee had sent to an official in the Charity, and to the Respondent. Mr McKee’s email included the following comments:
At a meeting of the membership from one side of the Lough Neagh Rescue dispute, the attached draft articles where [sic] agreed, subject to further validation by NICVA. The articles have been derived from the best parts of the draft articles recently circulated by yourself, with minor changes to reflect good governance practice.
As the Commission have effectively, by suggestion, removed our side of the disputes dissemination mechanism, in the form of a website, social media platforms etc, I would respectfully request the Commission to facilitate the distribution of the draft articles to the complete membership.
These articles in our opinion, effectively protects the beneficiaries of the Charity, reflects the standing of the Antrim contingent, maintains control with the company and fully represents the interests of the membership. These articles are for consultation and we would welcome informed positive and critical feedback.
The draft articles referred to in Mr McKee’s email – and which the Tribunal was invited to consider – were identical to those which were the subject of the consent given by the Respondent, and which are the subject of these appeals, save in limited respects, as follows:
- The objects clause included at (4)(e) an object “to advance any other exclusively charitable purpose as the directors, may from time to time, decide in accordance with the law of charity.”
- The directors’ benefits clause at (8) did not include the definition of “company” which appears at (8)(d) of the articles as altered.
g. Ms Bell put it to Mr McKee that there was no change between what Mr McKee had proposed in his email of 14 August 2013, and what ultimately had been approved by the Respondent – that is to say, the articles that the Respondent gave consent to are identical to the articles that Mr McKee had declared himself satisfied with. Mr McKee responded by saying that he did not accept that they were identical – they were different as regards the membership clauses. Ms Bell put it to him that the membership clauses were not regulated changes. Mr McKee accepted that that was correct.
h. Ms Bell put it to Mr McKee that the changes were proper - they did not change the charitable nature of the charity. Mr McKee said that there was no analysis of whether the changes were exclusively charitable. There was no analysis of who the beneficiaries were. There was no statement that the issues were considered properly, or the issue of public benefit. He drew attention to the fact that this was a rescue charity, yet issues relating to the landscape were in play.
Mr Hughes’ evidence on the validity of consent issue
23. By way of examination-in-chief, Mr Hughes adopted his witness statement and gave the following additional evidence to the Tribunal:
a. Mr Hughes said that due to his health, his knowledge of the documents was not as strong as it might be.
b. It was he who had first gone to the Respondent to involve it in the affairs of the Charity for the benefit of the Charity and its members and those who needed assistance from the Charity. He said that that was not how matters had turned out.
c. In response to a question from the Tribunal asking him to explain his concerns about the changes to the articles, Mr Hughes said that the Respondent did not have the right to undertake the alteration. He said that the Respondent had improperly become involved in the affairs of the Charity, as he put it, “tip-toeing in and out of the Charity”. He said that the Respondent had ignored valid input and years of experience, in terms of management and membership. Mr Hughes said that the Respondent had not been open and transparent. If it had been, things would have been different.
24. In her cross-examination, Ms Bell addressed the following points to Mr Hughes:
a. Ms Bell suggested that the Respondent had the power to consent. Mr Hughes accepted that the Respondent had the power to grant consent, but the issue was how it had dealt with consent in this case. Mr Hughes said that the intervention which he had witnessed was totally inappropriate.
b. Ms Bell referred Mr Hughes to his witness statement, and, in particular, paragraph 11, which set out Mr Hughes’ criticisms of the changes. There he had said that the conservation object had no place in a search and rescue charity – it was an “orphan object”; the directors’ benefit clause was included solely for the purposes of retrospectively concealing activities of the Respondent’s chosen side in the dispute; and the dissolution clause might allow the Charity to vest its assets in any charity – such as conservation charities.
c. Ms Bell put it to Mr Hughes that he had no issue with the changes that the Respondent had consented to. Mr Hughes said that he disagreed entirely. He said he had substantial issues. He said that it was important to recognize that the draft proposed articles was not his document. At the time, he had been a new director. He was not familiar with operational effectiveness. It had emerged from professional sources. He had extensive knowledge of the Lough Neagh environment both from the point of view of taking a vessel into Lough Neagh and a background of providing charitable works and volunteering.
d. Mr Hughes agreed that he was a director of the Charity. He accepted that he had read the articles when they were submitted. When it was put to him that he knew of the three changes, he said that that was correct. However, he thought that this was a working document, and not all signed up. He saw it as a conciliatory starting point.
Mr Burke’s evidence on the validity of consent issue
25. By way of examination-in-chief, Mr Burke adopted his witness statement. He emphasized that he had not been allowed to attend the AGM; that he had not been made aware of the Respondent’s consent to the changes until one year after it was given; the new objects clause was recklessly wide; the membership benefits clause was contrary to the ethos of the charity; and the proxy votes at the meeting had been improperly excluded.
26. In cross-examination, the following points were addressed to Mr Burke:
a. Ms Bell put it to him that his main concern was with respect to the new membership clause. Mr Burke said that was correct, but he was also concerned about directors’ benefit and the meaning of physiography.
b. Ms Bell put to Mr Burke the various versions of the alterations and suggested that they were not substantively different. Mr Burke responded by saying that if the Respondent had given him the chance, his attention would have been drawn to it. He was not skilled in memoranda and articles. He had not been through every paragraph. He said that had the Respondent told him at the time it gave consent, he could have made his mind up.
c. Mr Burke accepted that he had been invited to the meeting: he got an invitation that had attached the document that included the three changes that the Respondent consented to, although he said that he did not believe he had read it in depth to notice a change to the objects. He said they found out about the changes in November 2014.
d. When Ms Bell put it to Mr Burke that it was not for the Respondent to advertise or consult with members of charities before it makes changes to its Articles, Mr Burke said that the Respondent had had extensive engagement with him. He said that the principles of fair play and openness should have applied. He said that this was not a state secret. They should have been told.
e. Ms Bell asked Mr Burke did he accept that the membership changes were not a regulated change. Mr Burke did.
Mr Cahoon’s and Mr Dugan’s evidence on the validity of consent issue
27. By way of examination-in-chief, Mr Cahoon adopted his witness statement and gave the following additional evidence to the Tribunal:
a. He accepted that he had been sent an invitation to the EGM, although he said he had previously been sent letters saying he was expelled and he had been locked out of the Charity’s premises
b. He said that bearing in mind how he had been treated, he felt that his only option was to use a proxy vote at the EGM. The fact that it was not then accepted was wholly disheartening.
28. In cross-examination, Ms Bell queried the nature of Mr Cahoon’s concerns about the alterations. He said he had no idea what conservation has to do with life-saving. Under re-examination Mr Cahoon said that he was informed of the changes only in the invitation. He said it was an invitation he did not feel comfortable accepting.
29. Mr Dugan was then called to give evidence. He was sworn in and adopted his statement as his evidence. He said that he volunteered to go the meeting as he had no history with the organization. He described an intimidating atmosphere.
Ms McGahey’s evidence
30. By way of examination-in-chief, Ms McGahey adopted her two witness statements. In her first statement, Ms McGahey explained the Respondent’s consent to the alterations, as follows:
a. The proposed new objects were wider than the original objects, but they were similar in nature to the original objects, were clear, easily understood and did not affect the charitable status of the charity;
b. The proposed new members’ and directors’ benefits clause updated the original members’ and directors’ benefits clause to reflect wording used in more modern articles of association used by charities;
c. There was no substantive change to the dissolution clause: again, the changes merely reflected modern wording.
31. Ms McGahey gave the following additional evidence-in-chief to the Tribunal:
a. Ms McGahey outlined that her position was that of a casework officer within the Respondent dealing with registration appeals and case work appeals.
b. Upon being referred to the consent-decision letter, signed by Ms McCandless, Ms McGahey confirmed that it was normal at that time for the Chief Executive to sign such letters.
c. When asked when she was aware of the Section 96 application, Ms McGahey said that she believed the case was allocated to her on 2 September 2013. The communication concerning the application came from Mr Neil Henry who notified Mr Kevin Kennedy that Section 96 consent was required. He instructed Ms Louise Cardwell, an administrative officer within the Respondent at that time, to open a paper file. Within Mr Kennedy’s email to Ms Cardwell, he copied in three case workers, but allocated the case to Ms McGahey. She said it could just as readily have been either of the other two.
d. She had not carried out the risk assessment. At that time, it was carried out, and is still carried out, by Mr Kennedy. A risk assessment was to inform the Respondent whether there are any consequences it should be aware of. For example, non-contentious changes may be low to medium risk; if the changes are not charitable, that would likely be high risk. Also, if the charity had a high profile interest, that would be high risk. Here, the risk assessment was because the changes were non-contentious but it was marked high due to the ongoing investigation work.
e. Ms McGahey said that she considered the alterations as being regulated alterations because Section 96 defined these as any alteration to the objects, dissolution or benefits. She did not consider any other clauses.
f. When asked to compare and contrast the current objects, dissolution and benefits with the altered provisions, Ms McGahey said that they largely were the same as before. As regards the beneficiary clauses, this now extended to a company. As regards the dissolution clause, this was the same in substance as it had been before. As regards the objects, in her recommendation, Ms McGahey had recognised that the changes did not affect the charitable nature of the objects.
g. Ms McGahey noted that under the Respondent’s case work manual, the case worker could request information if she was unsure if it would affect the charitable nature of the company. The emails were in accordance with the regular advice issued earlier.
h. When she was asked why she did not seek the rationale for the changes, Ms McGahey said she did not see any need to seek any further information. She said she would only do so if she was unsure as to how it would affected the charitable nature of the company.
i. Although she had recommended consent, Ms McGahey said that as this was a high risk, her recommendation had to undergo a quality review, by Mr Kennedy, as per the manual.
j. Ms McGookin, the Head of Charity Services, had asked for sight of the decision, not because her approval was required, but because this was one of the first instances in which a consent decision had been made.
k. When asked how long it took to assess the case, Ms McGahey said that she considered the request on 2 September 2013. When asked why this took place so quickly, Ms McGahey gave a number of reasons:
i. It was relatively straightforward; she did not need any further information;
ii. The workload in the Respondent was not as it now is – it was much lighter;
iii. The AGM was due on 3 September 2013, that also bore on her mind.
l. She believes that the consent was dated 3 September 2013 and was issued by email from herself with the letter of consent attached.
32. In his cross-examination, Mr McKee addressed the following points to Ms McGahey:
a. When asked whether, when she was considering the case, “the clock was ticking”, Ms McGahey accepted that it was.
b. As regards the inclusion of “physiography”, Ms McGahey said that she was no expert, but that the Respondent would rarely take issue with including new objects within purposes. She said that she had no issue with the charity including a conservation purpose. When it was suggested that the Respondent should have asked for more information regarding the physiography, but had not because of the time pressure, Ms McGahey said that was she under no time pressure to have the document issued to the charity by a given date. She was aware of the meeting on 3 September 2013. Ms McGahey said that if she had thought that the changes were going to affect charitable nature, she would have sought further information. She had followed the manual.
c. Mr McKee asked Ms McGahey to comment on the fact that thirty-two members had opposed the changes to objects, benefits and dissolution: there was unhappiness which should have been taken into account. Ms McGahey said that she was not aware that the change had caused discontent. That would only have become clear at the EGM/AGM – which was after the consent was given. She said that the Respondent does not take account of the views of the members of a charity before it gives its consent. When asked why not, Ms McGahey explained that under the legislation, the consent of the Respondent is whether the changes affect the charitable nature of the organization. The legislation does not require the Respondent to look at anything else.
d. Mr McKee queried that assertion, given that the Respondent takes account of risk? Ms McGahey said that the idea of high risk referred to the fact that the charity may have a high level of public interest or contention – therefore there would be a quality review of the caseworker’s decision.
e. Mr McKee suggested to Ms McGahey if the changes were not consulted upon, there was greater risk: Ms McGahey said it was an internal matter for members or trustees to vote on whether the changes were acceptable.
f. Ms McGahey said that they get a lot of sorts of application – from solicitors, accountants, company secretary, directors, helpers groups, - it could be anyone.
g. Mr McKee asked did the Respondent check whether there was a quorum approving a change. Ms McGahey said that she did not look to see whether it was supported by a quorum. She emphasized that prior written consent is required to make a vote effective. To the contrary, if the Respondent had received already approved by a charity directors or trustees, that would be deemed invalid.
h. Ms McGahey was firm that the decision to consent was her decision. Paragraph 5 only referred to drafts of the letter and not to the decision.
33. In his cross-examination, Mr Hughes addressed the following points to Ms McGahey:
a. When asked to describe the level of understanding received from Mr Kennedy about the ongoing investigation, Ms McGahey said that she had no conversation or information as such about the investigation work with the Charity. The file was given to her to process as a new application under Section 96. She had no information other than that there was an ongoing investigation. She confirmed that the decision to give consent had been made by her in isolation. Ms McGahey said she was an independent decision maker. When Mr Hughes asked whether Ms McGahey was saying she had no line of sight regarding the investigative work, Ms McGahey said that was correct: she just knew that there was an investigation.
b. Mr Hughes asked whether the application was non-contentious. Ms McGahey said that although there was an inquiry, the changes were non-contentious. A charity would commonly adapt standardized dissolution and membership benefits clauses. However, the objects vary. She had viewed the changes here as one would find in a template, and in alignment with standard documents. The wording in the model template and in the proposed alteration, as regards dissolution/membership benefits, was almost identical.
c. Mr Hughes asked was there no consideration given to membership/management feelings before consent was given? Ms McGahey said that that was a correct statement – none of those criteria are set out in the legislation as to whether consent should be given.
d. Mr Hughes suggested that Ms McGahey was not properly briefed. Ms McGahey did not accept that. Mr Hughes asked Ms McGahey about her understanding of the Charity. She replied it boiled down to the legislation and the Section 96 manual which ran alongside each other. There were not any organizational considerations.
e. Mr Hughes asked about the idea of the change being in the “best interests”? Ms McGahey said that, in general, she could see from prior email correspondence that the changes were being submitted in accordance with regulatory advice. A charity complying with regulatory advice is acting in the interests of the charity. Mr Hughes asked about the regulatory advice: Ms McGahey said that she did not see it, save for the email. Mr Hughes pressed her about the advice. She said that there had been some, that there should be an updating. She said that she did not have any knowledge about what the regulatory advice said about the objects.
f. Mr Hughes asked how did Ms McGahey assess whether the objects were in the best interests of the charity? Ms McGahey said that the new objects were clear and certain; they were of an exclusively charitable nature; which was to be contrasted with the current objects. Ms McGahey said that if the current objects, had been submitted to her, she would not have accepted the Charity for registration. The new objects were much better – they were a mixture of objects. Mr Hughes asked Ms McGahey how did she decide what was in the best interests? Ms McGahey said that when compared with the current objects, they were worded more as powers and not as clearly defined charitable purposes. The proposed changes went some way to clarify the charitable nature of the Charity. She contrasted that with the old purposes: they were not clearly charitable and were to do with equipment.
g. Mr Hughes asked how the best interests fitted in with the aspect of the objects that dealt with other countries. Ms McGahey said that that was in the best interests of the Charity – for example if there was a disaster in the Republic of Ireland or Scotland. Under the old document, it would have been a breach to have assisted in those circumstances.
h. Mr Hughes put it to Ms McGahey that she was not informed by the organization, or by investigation, and she was not an expert, yet how did she decide? Ms McGahey responded by saying that she did not come up with the suggested changes: this is what the trustees wanted. The Respondent would not revert to an applicant and say “are you sure?” She thought that that would interfere in the administration of the charity. The charity trustees decide on the wording; they decide. Ms McGahey said her role was to decide whether it was still charitable.
i. Mr Hughes complained that the decision had not been communicated to him. Ms McGahey said that was correct: only the applicant was informed. Mr Hughes asked why his status as initial applicant was rescinded. Ms McGahey said she did not regard him as initial applicant.
j. He asked was nothing done to verify if the party that had suggested the changes was acting in good faith. Ms McGahey said that was correct. There is no verification of the application as part of the process. The quality review checklist was done by Mr Kennedy.
Should the Tribunal receive further evidence on behalf of the Appellants?
34. As noted above, at the end of January 2017, the Tribunal received a further supplemental witness statement from Mr Gregory Burke, together with some documents, by way of an email copied to the Respondent. Mr Burke asked the Tribunal to admit the witness statement and the documents in evidence. His request was supported by the Appellants. Although copied into this request, the Respondent did not object. In any event, given the latitude which the Tribunal enjoys as to the receipt of evidence, the Tribunal has considered the witness statement and the documents. The essence of these was comprised in a contention that they showed that the Respondent had, for some time before the consent was given, conspired or operated so as to engineer a change in the articles of the Charity.
Consideration of validity of consent
35. As noted above, there are two main aspects to this question: (i) was the consent given by the correct organ within the Respondent; and (ii) was the consent correctly given, in a substantive sense.
36. Dealing with question (i) – was the consent given by the correct organ within the Respondent – the Tribunal reminds itself that this was one of the matters in respect of which the Appellants wished the Tribunal to send the papers to the Attorney General.
37. After considering the parties’ submissions, the Tribunal has concluded that the Appellants’ contention that the consent could only be given by the Respondent – e.g by its Board or by a committee with delegated authority - is incorrect. It is true to say that Paragraph 9(1) of the Schedule to the 2008 Act provides that the Respondent may make provision for the discharge of its functions by committees. But that paragraph does not say that the Respondent shall or must make provision for the discharge of its functions by committees. Indeed, it is notable that the Paragraph begins by recognizing and providing that the Respondent may “[determine] its own procedure”. The Tribunal’s conclusion in this regard is supported by the Interpretation Act, section 19 of which provides (so far as relevant) that a body corporate enjoys “the right to regulate its own procedure and business”. The Tribunal heard evidence that the Respondent had at a Board Meeting in November 2011 approved a case work manual setting out the procedures by which decisions would be taken. That is to say, the Respondent had determined its procedures for the discharge of its functions. Accordingly, the Tribunal rejects the Appellants’ contention that, unless the consent was given by the Respondent – e.g. acting by the Board, or by a committee – that such a consent is invalid. The Tribunal does not consider it necessary to refer this matter to the Attorney General.
38. The Tribunal now turns to consider question (ii) – namely whether the Respondent was correct to give its consent in a substantive sense.
39. Having considered the evidence, the Tribunal makes the following findings of fact:
a. The decision to give consent was taken by Ms McGahey. The case had been allocated to her by a more senior member of staff. She came to a view that consent should be given, but, given the “high risk” label that had been applied to the application, because of the inquiry, she referred the matter to a more senior member of staff, for a quality review, in accordance with applicable procedures. The matter was also viewed by the Head of Charity Services. Ms McGahey remained unshaken in her assertion that she was an independent decision-maker, acting in isolation. Notwithstanding the insight and overview of the more senior members of staff, the Tribunal is satisfied that the decision to give consent was the decision of Ms McGahey.
b. Ms McGahey’s decision to give consent was unaffected by any considerations relating to the ongoing inquiry or by any alleged conspiracy between the Respondent and some members of the Charity. Ms McGahey was adamant that she knew that there was an inquiry, but that was effectively the limit of her knowledge. It was not put to Ms McGahey that she was part of any conspiracy, and, even it had been, the Tribunal would have rejected that suggestion. In this context the Tribunal has considered the evidence in Mr Burke’s supplemental witness statement. The Tribunal rejects the suggestion that Ms McGahey’s decision was tainted by matters stretching back, earlier in 2013, relating to the decision to institute an inquiry. The Tribunal does not consider it necessary to refer this aspect of the matter to the Attorney General.
c. The decision taken by Ms McGahey was taken with a measure of speed in order to meet the deadline comprised in the upcoming AGM/EGM. On one view, the speed was surprising, given the significance of the changes. Further, in the context of a contentious inquiry, it might be understandable that the Appellants feel that the haste was unseemly. On the other hand, Ms McGahey explained that if she had required further time, she would have taken it, but she did not need to make further enquiries. Also, her lesser workload at that time allowed her to deal with the matter efficiently and quickly. More fundamentally, the Tribunal refers to its finding at paragraph 39.a. and b. above: Ms McGahey took her decision free from the influence of others in general, or an alleged conspiracy in particular.
d. There is little or no difference between (i) the alterations to which the Respondent gave its consent and (ii) the alterations which Mr McKee had, in his email of 14 August 2013 described as being “derived from the best parts of the draft articles recently circulated by yourself, with minor changes to reflect good governance practice” and which “effectively protects the beneficiaries of the Charity, reflects the standing of the Antrim contingent, maintains control with the company and fully represents the interests of the membership.”
e. There is little or no difference between (i) the alterations to which the Respondent gave its consent and (ii) the alterations which Mr Hughes had submitted to the Respondent in his Concern Form of February 2012.
f. The Appellants were persons who were directors of the Charity – in the case of Mr McKee, of some years’ standing, and in the case of Mr Hughes – for a much shorter time. The essence of the proposed alterations was something which they were prepared to commend to the Respondent – until, some considerable time later, they decided to resile from that position and to criticize the alterations which they had at one time supported and endorsed.
g. Ms McGahey considered whether the proposed alterations undermined the charitable nature of the Charity and concluded that they did not. Given the provisions in Section 2 of the 2008 Act, the Tribunal agrees with that assessment.
h. Ms McGahey considered whether the proposed alterations were in the best interests of the Charity. She considered that they were in the best interests of the Charity as (i) they fulfilled the earlier regulatory advice that the constitution be updated; (ii) they brought clarity and certainty to the objects of the Charity; (iii) as regards the members benefit and dissolution clauses, they were in conformity with standard templates. The Tribunal concurs with this assessment.
i. The events of the meeting at which the proposed alterations were considered took place after Ms McGahey gave her consent, and her decision was necessarily unaffected by those events. That was in conformity with the legislation, which required the Respondent to have given prior written consent.
40. Having regard to the findings set out at paragraph 39 above, the Tribunal has concluded that the Appellants’ appeal against the Respondent’s decision must be dismissed:
a. As a matter of law, Ms McGahey was authorized to make the decision giving consent.
b. Ms McGahey made her decision independently, not having taken account of irrelevant considerations (e.g. the ongoing inquiry or an alleged conspiracy) and having taken account of relevant considerations (e.g. the impact upon the charitable nature of the Charity and its best interests);
c. Ms McGahey was correct to conclude that the new objects did not adversely impact the Charity’s charitable nature, and indeed, they arguably enhanced it;
d. Ms McGahey was correct to conclude that it was prudent to modernize and update the members benefits and dissolution clauses;
e. The criticisms which the Appellants made of what transpired at the EGM/AGM on the evening of 3 September 2013 are strictly irrelevant to whether or not Ms McGahey was correct to give her consent, earlier that same day. Her role was to consider whether to give prior consent. As appears above, the Tribunal agrees with her decision. Further, it does not consider that the points which the Appellants have made about how the EGM/AGM was convened or conducted undermine the correctness of that decision.
Right of Appeal
41. Pursuant to Rule 32(2) of the Rules, a right of appeal lies from this decision of the Tribunal to the High Court of Justice in Northern Ireland. Any party, or the Attorney General, seeking permission to appeal must make a written application to the Tribunal for permission to appeal, to be received by the Tribunal no later than 28 days from the date on which the Tribunal sent notification of this decision to the person seeking permission to appeal. Such application must identify the alleged error(s) in the decision and state the grounds on which the person applying intends to rely before the High Court.
Signed: Adrian Colmer
7th April 2017