Charities (Protection and Social Investment) Bill [HL] — House of Lords, 2015-07-20
Topic: Law and Crime
Ruth Deech (Crossbench, Unknown): My Lords, this amendment also stands in the name of my noble friend Lord Bew. There is a little link with the discussion we have just had. The noble Lord, Lord King, mentioned the need to cut off the sources of funding that go to terrorists. This amendment is not just about terrorism—far from it, although it would have the side-effect that he has just mentioned if a charity were involved in such activities. It enables the victims of mistreatment by a charity to recover damages from the assets of the charity, not just from the trustees themselves. It by no means removes any responsibility or liability from the trustees personally: that remains. But sometimes when there is a victim—for example, of sexual abuse taking place at a charitable school which is not incorporated—the victim may need and deserve more damages than the personal trustee has at his disposal. It is only right, therefore, to go against the assets of the charity. The amendment would end the disparity between incorporated and unincorporated charities Charities, as we have heard frequently today, are not just about helping the poor, underprivileged and disabled. They are moving into the realms of big business. There are many areas now covered by charities, some of which operate without being incorporated: indeed, there is no requirement for them to do so. They include student unions, communes, Scouts, clubs and after-school activities. It is possible for there to be damage. We have heard a great deal about charities that harass the public when they are collecting funds. At the moment, only innocent trustees can be indemnified where there is a claim against them, but they remain liable. The amendment would in no way destroy the personal commitment that trustees feel towards the charity they are supporting Injured civilians currently have too little recourse against unincorporated charities that do them harm, some of which may be connected with terrorism. The remedies under the existing law are not adequate where the trustees of an unincorporated charity do not have sufficient personal assets and were themselves involved in the wrongdoing or were reckless or negligent and so are not entitled to be indemnified by the charity. While those creating or running a charity may be free to choose the legal structure, the victims are not, and this amendment is ultimately about protecting victims The position of a wholly innocent trustee would be ameliorated by the amendment. Instead of the victim having to claim against the trustee and the trustee having to claim against the charity under an indemnity, the victim would be able to claim against the charity directly and the charity will not claim a contribution from a wholly innocent trustee. This is a benefit, not a disadvantage, of the amendment. The amendment would apply where a trustee of an unincorporated charity is liable in tort by reason of his conduct in his capacity as a trustee of a charity, or a person employed by a trustee or trustees is liable by reason of his conduct in the course of that employment. It is just like a company which is liable when a director commits a tort in his capacity as a director of the company or an employee of the company commits a tort in the course of his employment by the company. This applies whether or not the act is ultra vires. This is elementary law We are calling for this law to be made more helpful to victims, without in any way disturbing the responsibility that trustees, rightly, bear. In the past, victims of sexual abuse by Scout masters have successfully claimed damages from the Scout Association, because it happens to be incorporated by royal charter. The victims can claim damages from the organisation itself, but many local Scout associations are unincorporated, and there are dozens of them. Victims of sexual abuse, if it were to happen in the course of the activities of these associations, may well find it difficult, or impossible, to recover substantial compensation. It is not right that the availability of a remedy for the victim of such abuse should depend on whether the particular Scout association happened to be incorporated A religious organisation may be established as an unincorporated charity. Former adherents may claim that it has been run as a cult and seek compensation for being imprisoned and deprived of their property by duress or fraud. The organisation may have substantial assets, since adherents are encouraged to donate generously, but the trustees may have no personal assets—so the claims by the victims are valid but completely worthless, because the trustees have nothing. They cannot demand that the trustees be indemnified out of the assets held on charitable trust since the trustees are themselves involved in the wrongdoing, in breach of trust In sum, this amendment will help victims and will bring to an end a difference between the incorporated and the unincorporated charity that has no justification. I beg to move.