Employment Tribunal Enforcement against an unincorporated trustee body

[Alicia86]

Brief back story: In 2013, whilst on maternity leave, I raised concerns about how my line manager was treating me. Subsequently, my employer initiated a swift redundancy process, and within a month had made me redundant without notice and whilst still on maternity leave. The employer retained my maternity cover worker.

 

I represented myself at an employment tribunal in Jan 2014; an Employment Judge judged that I was unfairly dismissed and treated unfavourably by my employer to section 18 of the Equality Act 2010. The employer was ordered to pay my notice pay, compensation for unfair dismissal and compensation for injury to feelings, amounting to around £8,000 in total. The establishment is named on the order rather than the names of trustees.

 

The employers are a small registered charity, a playgroup, managed as an unincorporated trustee body. The members of the trustee body change frequently. They operate out of rented premises and they don’t have much by way of assets. At the tribunal the employer presented bank statements attempting to show that they have ‘no money’. However, the Judge noted that the statements showed money was being moved around between several accounts.

 

The employer has engaged a solicitor who in short says the employer has no assets and no money and that the trustees are not financially liable for the debts. The solicitor has rejected a payment plan of £150 per month and a without prejudice settlement offer of £6,500. The solicitor has advised that they can only make payments of £50 per month. The employer has paid the notice pay one made one late payment of £50.

 

A County Court Order has since been issued for the full award plus interest to date.

 

I haven’t engaged a HCEO yet although I did enquire and they advised me that bank accounts were protected. Please could colleagues here advise me on the best approach in going forward? I’ve included as much relevant detail as I can here but please just ask if there is something that needs clarifying. Thank you for all your help.

[ploddertom]

Like all awards be they for ET's or CCJ's there is no guarantee that you will ever see 1p of the money awarded to you. HCEO's are probably best placed to advise you if they can proceed although I would urge caution on who to talk to as some are better than others - better off talking to a few. I would imagine instructing a solicitor for yourself will not be cheap and it could be money down the drain if they truly have no assets. Unfortunately we cannot advise who or who not to use.

[HCEOs]

As ploddertom rightly says an award does not necessarily mean getting paid.

 

High Court enforcement is an option and whilst they may not have much in the way of assets, the threat of removal of these can often prompt a payment.

 

It really comes down to a financial decision for you. Given that to instruct an HCEO will cost a mere £60 and usually there is no abortive for ET cases it could be worth a go. Just be realistic on the chances of success.

[HCEOs]

Just one thing to note, it is likely that the Trustees will put in a claim to the goods taken into control. Enforcement against such bodies is always difficult.

[Alicia86]

Is a viable route to apply for a Third Party Debt Order via our local County Court where the County Court Judgment was issued? Is this something a layman could do?

[HCEOs]

Yes, but if they're moving money around it is likely to be a waste of time.

[Alicia86]

Thank you for your replies HCEO. I set out to really just get the judgment at an employment tribunal. So I'm lucky already to have negotiated the tribunal and succeeded. However, the appointment of their solicitor, which I certainly can’t afford to do, and the slippery bank accounts does have me feeling that I shouldn’t let this one go.

[Alicia86]

Thank you for your replies HCEO. I set out to really just get the judgment at an employment tribunal. So I'm lucky already to have negotiated the tribunal and succeeded. However, the appointment of their solicitor, which I certainly can’t afford to do, and the slippery bank accounts does have me feeling that I shouldn’t let this one go.

[ploddertom]

Does make you think that they can afford to go to the expense of engaging a solicitor?

[HCEOs]

As I said, in the scheme of things £60 to instruct an HCEO doesn't sound like that bad an option. It might just rattle the cage enough for payment.

 

There are plenty of HCEOs around so make sure you do some research as some are better than others.

[Alicia86]

Yes, thank you Ploddertom. With regards to the HCEO route... there are few material assets, the premises are rented and the charity name, rather than the trustees, are named on the order. So I'm not sure it has legs. However, a Third Party Debt Order via our local County Court is an option though not something I know much about, other than what I have read on the web. I'm not sure of the court fee's involved for this or if the order of £8000 is one a court would consider warrants this action.

[HCEOs]

From memory an application for 3rd party debt order is £100. It is my understanding that unless the full amount is in the bank account then this will fail.

[Alicia86]

I'm still keen to hear from others on my possible options, I'm very grateful to the lovely people of this forum that share their knowledge. Thanks!

[ploddertom]

The problem you have is that something like your situation is quite rare so doubt there are many who will have much knowledge of what to do. Most applications made through the County Court system have a cost of £100 for each application & it is easy to rack the expenditure up. As HCEOs said earlier transfer up to the High Court for enforcement carries a £60 fee and no abortive fee if they cannot succeed. There's a good set of FAQ's @ http://thesheriffsoffice.com/faqs/category/employment-tribunal-awards-acas-settlements

 

Forms EX321/2/3/4/5 give various options you can use through the County Court, each is available through HMCTS website.

[wonkeydonkey]

It could be worth a call to the Charities commission, they have the power to 'look into' anything that calls the charity into disrepute.

[lookinforinfo]

Alicia you worked for the charity so I assume you must have some idea of their financial position. Carrying on from there do you think that £8000 is a kind of sum that they have

either in their bank accounts or held in a reserve fund. Do you know how many bank accounts they have or at least some of them. Have you seen any of their Profit and Loss

sheets or their Annual balance sheet or can you get a copy from Companies House?

 

If you are sure that they are stalling on paying you but do have money somewhere then you could consider a Mareva Injunction. This freezes their bank accounts thus denying

them the right to move money around or paying direct debits and incoming cheques so it can be quite difficult for them to operate. I guess the Injunction would be more expensive to instigate but if you are on benefits at the moment you might get the costs waived.

[sweep1]

Interesting topic

 

Enforcement of a debt against a unincorporated trustee body

 

Interesting to see that HMRC consider

"However, charity trustees (who may also be members) have a greater role and have a duty to act prudently in administering the affairs of the charity and are responsible for ensuring that a charity fulfils its legal obligations. As such, trustees can be held personally accountable for properly determined liabilities of a charitable trust in most instances."

http://www.hmrc.gov.uk/manuals/dmbmanual/dmbm585220.htm

 

It appears from a brief reading of this

http://www.charitycommission.gov.uk/detailed-guidance/protecting-your-charity/vicarious-liability-of-a-charity-or-its-trustees/

that trustee members could be held personally liable for the debts.

I can`t understand why the solicitor has said the trustees cannot be held liable,my understanding is that if the body cannot meet its liabilities, the trustees at the time of the action can be sued and held liable.

Any one or more of the trustees will hold legal title to any assets of the body

https://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/uk-charity-charitable-incorporated-organisations.pdf

[stu007]

1. As they are a charity check the Charity Commission Website if they are registered and also look at their annual accounts.

 

2. As the charity is run by Trustees I would be surprised if the charity does not have insurance that covers the Trustees for their role: http://www.charitycommission.gov.uk/detailed-guidance/protecting-your-charity/charities-and-insurance-cc49/

[Alicia86]

Those are fantastically useful leaflets you mentioned ploddertom. Thank you for pointing them out to me.

[Alicia86]

Thanks for your help Lookinforinfo. There are times of the year when I would expect the employer's account to have sufficient funds to settle the order. I don't know anything about the Mareva Injunction and didn't find it easy to research on the internet. Is there a reason one would use a Mareva Injunction over a Third Party Debt Order? I'm considering timing a Third Party Debt Order to coincide with when the accounts will have the funds. I have the account numbers and sort codes for two accounts. I am not on benefits so I do need to choose an affordable way forward. I found the Third Party Debt Order costs £100, although not sure of any hidden costs. I don't know the cost of a Mareva Injunction.

[Alicia86]

Yes Sweep1, I quite agree. Both the Charities Commission and HMRC are clear about the Trustees' liabilities. The frustration is that the HCEO's I've spoken to won't go near the trustees' because they are not named on the order. The Trustees in place at the time of my redundancy are named on the Charity Commision's website, the ET Order names the Charity, but nobody feels able to join the dots. It seems, were I to take this course of action, it would be for me to sue each of the Trustees individually, and that quickly becomes expensive. Remembering too that the order is only for around £8000.

 

I wish the ET judge at the time had gone a step further and named the trustees responsible on the order. It would have made enforcement easy. As it is, it's left a loophole for the Trustees to exploit.

[lookinforinfo]

Alicia the advantage of the Mareva injunction is that it freezes the bank account and that prevents the bank from paying cheques [so they have to be returned unpaid which

is an embarrassment for the charity]. At the same time cash and credits cannot be paid in and of course standing orders, direct debits wages and director fees cannot be paid out.

The other thing about the injunction is that there is no prior warning which means that they have no chance of moving or hiding assets.

So it is quite a draconian injunction. I don't know how much they cost but would imagine that it would be more expensive than £100. Possibly if you are on benefits you might

qualify for a reduction or even free.

I think you would need legal advice before embarking on it though.