The recent sheriff court decision in D v Victim Support Scotland covers issues on which all charities should be aware. The central point in question in the case about alleged negligent service provision is important. But so are other topics raised by the sheriff about the charity’s constitution, annual accounts and what the charity was actually providing and therefore seeking to achieve. Here are some governance reflections on the case.
The background and decision
D had been the victim of abuse. As a result D sought to claim for compensation under the Criminal Injuries Compensation Authority scheme (“CICA”). D was approached by and then visited an office of Victim Support Scotland (“VSS”). VSS then supported D to make a claim to CICA. In submitting the claim and considering eligibility for certain types of claim from CICA, VSS did not seek compensation relating to loss of earnings by D. The prospect of making such a claim came to light when D’s brother (also a victim of the same abuse) received significantly more from CICA.
The case centred on whether or not VSS owed D a duty to exercise reasonable skill and care in acting as his representative in his application to CICA. VSS argued that it did not owe such a duty. VSS argued that in assisting D it was acting as a conduit for him to fill in and send off the claim form rather than acting as D’s representative and the guidance provided was at a level of the role and responsibility of a friend or relative rather than an adviser.
The sheriff decided that VSS did owe D a duty of care in the submission of the CICA claim and that it had failed in that duty. There will be certain further court procedures (on matters such as the causal link between a breach of duty and any loss) following this decision before any compensation would be awarded by the court to D.
Service provision and what was the charity providing
Beyond the narrow issue of whether or not VSS owed a duty of care, the sheriff made a number of points and observations that are of wider import to charities. Issues and observations at the heart of what a particular charity is seeking to achieve. In looking at what a charity is here to do, the sheriff considered VSS’ annual report, its constitution and also material such as leaflets and website.
The charity’s constitution
In relation to the constitution and in particular the objects and a power, the sheriff noted that VSS’ annual report perhaps put the aims of the charity more succinctly than its constitution. More fully, the sheriff said:-
“The objects for which it was incorporated include (per its Memorandum of Association): “to relieve poverty, sickness and distress among persons who have suffered the same as a result of any criminal offence committed by any person or by any means whatever” and its powers include “1. To deliver a service to people affected by crime”. These aims are perhaps put more succinctly in the opening sentence of the Directors’ Annual Report for year ended 31 March 2015: “Victim Support Scotland is committed to enhancing its role as the lead provider of support and assistance to victims of crime.”
It would seem that the sheriff was highlighting that the annual report more neatly brings together the overarching aim to support victims with the fact that support is delivered or provided. There is something to be said for that point in creating all-encompassing purposes for a charity. Modern charity constitutions (and particularly in the drafting of Scottish Charitable Incorporated Organisation constitutions) will often adopt that approach and seek to ensure purposes are not inadvertently relegated to the status of a power.
Charity trustees should consider whether their charity’s constitution places items in the powers part of their constitution that are more properly part of their purposes. This is common and best avoided. That perhaps unintentional split formulation of purposes (across the purposes and powers) can also have tax consequences in relation to primary purposes trading.
The charity’s annual accounts, website and leaflets
We have noted before the growing importance of the annual accounts as a place for narrative and not ‘just’ numbers: the trustee annual report is important. D v Victim Support Scotland shows that in a formal setting the annual report can be referred to and matters. Looking positively and outwith a court-setting, it provides a window into the charity’s purposes and activities. It offers, as the sheriff noted, an opportunity to highlight the achievements and expertise of the charity.
In arriving at his decision the sheriff made reference to the amounts of CICA compensation secured for victims and the specialist skills of VSS’ employees and volunteers. The sheriff said these claims were “justified” and later noted the link between VSS’ activities and the positive impact that has made on victims..
The sheriff also referred to VSS’ website to understand the type of services and assistance it offered.
What is clear from the sheriff’s decision is that the annual report, website and other material were important to the sheriff understanding what the charity does, how it does it and why it does it.
On January 5, 2018