In a recent High Court case the Athlone Town Stadium trustee was removed after the Court found that there were multiple breaches of trust, including allowing the stadium to fall into disrepair.
Background
In this case the Plaintiff was a member of the executive committee of Athlone Town AFC (the Club) whose senior men’s football team play in the First Division of the SEE Airtricity League. He took action against Athlone Town Stadium Limited (the Defendant), a company which holds the legal interest in the Club’s stadium (the Stadium) on trust for the Club.
The Club and the Defendant entered into a deed of trust in 2015 whereby the Defendant would hold the Stadium on trust for the Club and would undertake to only deal with the Stadium as directed by the Club (the Trust). About a year later, in April 2016, the chairman of the Club wrote to the Defendant setting out various failures to discharge its duties as trustee, including allowing the Stadium to fall into disrepair. In the letter, the Club chairman also terminated the Trust and called for the Defendant to transfer the legal interest in the Stadium to the trustees of the Club. The Defendant failed to do so and proceedings were issued by the Plaintiff for the Defendant to be replaced as trustee.
Breaches of Trust
First, the Court held that the Plaintiff’s entitlement to bring proceedings arose from the Club’s constitution, which granted powers to the executive committee to deal with such matters. The Court further held that the Plaintiff was a beneficiary of the Trust and could also bring the proceedings in that capacity.
The Court accepted that a number of the Defendant’s actions amounted to a breach of the Trust, including denying the validity of the Trust on affidavit, failing to transfer the interest in the property having been called to do so, threatening to sell the Stadium without recourse to the Club, allowing the Stadium to fall into disrepair, failing to deal with correspondence in respect of insurance and placing locks on the gates of the Stadium thereby restricting the entrance for use by Club members.
When can the High Court remove trustees?
The Court held that it had “inherent jurisdiction to remove trustees where they act deliberately or incompetently or even where their conduct is deliberately obstructive” and that it could exercise that power “where the welfare of the beneficiaries demanded it, even without incompetence”.
The Court held that the Defendant committed multiple breaches of the Trust and ordered the removal of the Defendant as a trustee. In its place it appointed Athlone Town A.F.C. Company Ltd, a company limited by guarantee set up as a vehicle for the Club to act in a legal capacity. The Court also ordered that the Defendant transfer its legal interest in the Stadium to the Club.
Clubs should consider their governing constitution
The rights and duties of members of an unincorporated club are governed exclusively by its constitution. The Court’s consideration of the representative provisions in the Club’s constitution highlights the importance for unincorporated clubs to have clearly defined decision-making rules in its constitution.
An unincorporated club cannot hold property in its own name. Therefore club property is invariably held by some of its members on trust for the club. The Club’s decision to hold the legal title to the Stadium in an incorporated body will make it easier to deal with the property in the future. When a trustee of the Club retires or dies it will not have the burden of transferring legal title of its property.
Contributed by Patrick Murphy
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