Councillors role when the Council is a sole Trustee and Indemnity Insurance

Question

The Parish Council is registered with the Charity Commission as sole trustee of a recreation field, which means all councillors are Trustee's, the Clerk refuses to acknowledge the Charity Commission guidance and as such we have no Trustee's Indemnity insurance. The Clerk has been in post over 3years and the land has been registered with the charity commission since the 60s.

Does this carry any risk to me as a councillor please?

Answer 1

The clerk the Clerk is there to serve the council, not to unilaterally make their own decisions..  He or she should be ordered by resolution to acknowledge the Charity Commission guidance and work by it or be subject to action by your staffing committee. .

Answer 2

Does the field belong to the Parish Council, or are they acting as custodian trustee for another charity? Confusingly, a custodian trustee is not a trustee in the charity law sense. If you're not sure, the easiest way to find out is to do an online Land Registry Map Enquiry. The Title Register will cost you £3.00, assuming the land is registered and will confirm the beneficial owner.

If the Parish Council is merely a custodian trustee, it acts on the instructions of a third party, so needs no indemnity insurance. If the Council is acting as Trustee in its own right (a managing trustee), indemnity insurance is advisable, unless the charity's governing document specifically prohibits this, as some older documents do. Indemnity insurance is normally included in most charity insurance policies these days.

I've suggested the Land Registry route, as it is more reliable than asking someone who has been on the Council for years, as the all-important difference between managing trustees and custodian trustees is often lost in the mists of time and the roles become confused. I am dealing with two such cases at the moment, where community centres have been built by Parish Councils on land they thought they owned, but have now discovered that they don't.

Comments

The Council is the registered owner. There is nothing in the Indentures or Land Registry Title which prohibits Indemnity Insurance. The Indentures state the land is for recreational purposes forever. The Council took out a deed of dedication with Fields in Trust a few years ago.The trusts has no insurance the buildings are insured through the Councils insurers. Am I making a mountain out of a molehill as I am told by the Clerk personal liability only arises if negligent decisions are made and as a majority take the vote, it would be extremely unlikely. Due to Pecuniary and therefore potentially prejudicial declarations I do not participate in all the decision making.
Thanks
Jude

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If the charity manages assets owned by the Council and the individuals perform the role of charity trustee by virtue of being an elected member of the Council, their acts or omissions should be covered under the Council's insurance package, in which case no additional insurance cover would be required. An email to the insurance company, setting out the facts, would clarify this.

Personal liability is a potential issue for trustees of unincorporated charities. The most commonly-cited examples on public open space are trees and children's play equipment. Public liability insurance policies place obligations on landowners with regard to inspection regimes, so failure to comply with those obligations would be a negligent act, sufficient to nullify a claim. I agree with your Clerk that such situations are extremely unlikely, but the same argument could be used with regard to insuring a building against fire.

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Since raising this query I have been provided with a password to access GAPTC where I found the information I was looking for. I am now satisfied the Council is the sole trustee, therefore carries the responsibility should anything go wrong. I am NOT a trustee, there is a distinct lack of separation between council business and trust business which causes confusion.

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So, the Council as a corporate entity is the legal sole Trustee, the people who make the day-to-day decisions regarding the management of the charity's affairs (i.e. the individual councillors) would be deemed to be Trustees under charity law, but the decisions they make would be made in their capacity as Parish Councillors, as they have been elected to administer the affairs of the Council, part of which includes the recreation field, but not specifically elected or appointed in any individual capacity in relation to the charity. The decisions they make are, in effect, instructing the Parish Council as the legal entity, on how to act with regard to the charity, but the ultimate responsibility for doing so rests with the Council, not the individuals. Does that make sense?

Any acts or omissions by you in your capacity as a Parish Councillor would fall within the remit of your Parish Council's insurance, but as with all insurance questions, confirmation should be sought from your insurance company.

Disclaimer - The above is not legal opinion, but is based upon my understanding of the facts as presented.

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That's not how I read it. How can we be Trustee's if the sole Trustee is the Council? From my understanding there should be a committee who make the decisions on behalf of the trust, the council should hold the trust accountable for the decisions, I think! The Clerk has recently undertaken some training, hopefully she will let us know at some point. I do think we should ask the Insurers about the indemnity insurance as there may be some legal loophole which may need closing!  It's a minefield which does need legal opionon to cover all eventualities.

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The Charity Commission explanation is as follows:-
If you are involved in running a charity but don’t know whether you are a trustee, check the charity’s governing document. (This is the document that sets out the charity’s rules; it may be a constitution, trust deed, articles of association or similar document.) It will tell you which body has ultimate authority and responsibility for directing and governing the charity. All properly appointed members of that body are charity trustees in law, whatever they are called (trustees, directors, committee members, governors or something else).
If you are a member of that body, you are automatically a charity trustee. You share, with all members of that body, equal responsibility for the charity.

The above applies soleley to charity law and not to any other.

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I've been delving more deeply into this one and have discovered that the public advice published by the Charity Commission, from which the above quote is derived, is contradicted by their internal guidance for staff. The staff handbook includes the following:-

"4. Constitutional issues for local authorities when acting as charity trustees
In cases where a local authority is sole trustee, it should be remembered that it is responsible in the same way as any other charity trustee for carrying out the normal duties and responsibilities of a charity trustee.

4.1 Who may make decisions
It is up to the local authority to decide, within the scope of local government law, what structures should be used to reach decisions in its name as trustee. An alternative to requiring all the decisions to be reached by the full body of councillors, for example, is to set up a separate committee to discharge its responsibilities as trustees (see section 101 of the Local Government Act 1972).

4.2 Position of individuals acting on behalf of a local authority
Whatever the structure employed, the individuals concerned are not themselves charity trustees. They must, however, act in a responsible way so as to ensure that the local authority acts properly as a charity trustee. If they fail to so this, they may be liable to the council under local government law for any losses it bears as charity trustee (see section 6 below)."

and

"6. Liability of a local authority and its agents
6.1 The general position in law
The position is similar to that for any corporate trustee (see section 4 above). In principle, a corporate trustee (such as a local authority) is liable for breach of trust in the same way as an individual trustee. It can be sued for breach of trust, and if liable will have to compensate the trust out of its corporate assets.
Whether the individual officers who commit the local authority to an action which results in a breach of trust are in turn liable to compensate that body (in its corporate capacity) is a matter for local government law: it is not our concern. Similarly, any complaints on this topic should be addressed to the District Auditor.

6.2 Indemnity insurance
We should NOT make an Order authorising the purchase of indemnity insurance for the authority as sole trustee out of the charity’s funds. A public body with the capacity to act as charity trustee should be prepared to accept the ordinary measure of legal responsibility for its actions as such, without seeking any indemnity.
Additionally, because any personal liability incurred by the councillors will be to the council rather than directly to the charity, the taking out of trustee indemnity insurance will not be appropriate, because they are not charity trustees. It would not therefore be expedient in the interests of the charity to provide cover for possible liabilities incurred by councillors."

As this appears to relate directly to the subject of your original question, it should be taken as a definitive answer.

Every day's a learning day, as the saying goes!

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Thanks this is exactly as I had discovered when digging around.