Lynton and Barnstaple - Operations and Development

..as long as all that we end up with ultimately is not lots of disjunct stretches of empty trackbed with no trains running on any of them except for the current WB-KL bit.

 

Yes by chopping it up in to small peices and selling it in such away that everyone can have a peice is one way, the other and this is why, I have in the past suggested setting up a fund raising group that is modelled on the same lines as that of the Great Ormond Street Hospital Trust or the 1st Wishing Well Appeal.

This model has been used by many of the bigger Charities in the UK since 1993 and I have yet to see an adaption of it to any of the Heritage Railway World appeals. It sure won't be instant cash in the bank, as this method takes time to bring in results. But with it will bring a reason why we also need good governance in place.

The only thing that is stopping it going ahead is the lack of a rock solid Business plan and that can only be written and also needs to be understood by the Trustees as the first stage of the process.

If anyone wants some late night reading, try and find a copy of Charity Appeals by Marion Allford (Amazon have it for about £3.00 inclusive of postage)

 

With all due respect Colin, have you stopped to wonder why none of the Heritage Railway organisations haven't followed that plan?
Maybe it doesn't quite work for Heritage Railways? I'm sure it has been looked into but dismissed for a reason.
I also note it's a model now 30 years old, much has changed since then.

 

With greatest possible respect you have once more firmly grasped the stick at the wrong end. The argument is not whether the trustees are operating the trust in the best interests of the public or its members, but the whether the trust is being effective at all, and whether its trustees are capable of following the rules of the organisation or simply make it up as they go along.

 

Whether they are complying with the Articles and the law is a separate issue (and I agree an important one). However as you say are they being effective? That raises the question of against what measure….the wishes of those who would like to see quicker progress with extension or their statutory duties ?

 

It has (IMHO) sod all to do with the extension as such. You’re utterly hung up on the idea that members are always trying to get trustees to behave contrary to the best interests of the railway. This might sometimes be the case, but where it is the case INVARIABLY the trustees have done a poor job of communicating.

in this case the trustees are hell bent on extending in a repeat of the previous and failed scheme with minor changes. They have been caught being at best loose with the truth on more than one occasion. So far as I can see the membership simply wants some explanations. Indeed whilst the membership would certainly like to see the railway expanded there is no direct argument about this at the present. What the members would like is a board of trustees that is effective against their (the trustees) own measures of success. The trustees have set the measure, and failed to deliver. Nobody is setting external measures. If you haven’t understood this, you haven’t understood the nature of the argument here.

You might experience a sense that your volunteers and members don’t always understand what you want(ed) the NYMR to become or to do. You may feel that they’re don’t understand you. You may hear that repeated from other trustees and directors at other railways. But not all. Not those that listen, explain and engage with their members.

 

Interesting. My reading of s172(2) "Where or to the extent that the purposes of the company consist of or include purposes other than the benefit of its members, subsection (1) has effect as if the reference to promoting the success of the company for the benefit of its members were to achieving those purposes" as applied to the Trust is that, as there is no members' benefit in a Trust, the directors (Trustees) must exercise their obligations under section 1 as if the Trust members were members of a company and therefore, "promote the success of the company for the benefit of the members as a whole". This is at odds with your claim that it's "duties are to further its public benefit charitable purposes instead of the interests of its members", there is no mention of the charitable duties in the Section we are discussing.
This issue of the rights of Trustees to ignore their members is one you consistently put forward, apparently assuming that the Trustees always make the right decisions and that the membership are always wrong. Whilst you hang on to that interpretation like a drowning man hangs onto a log, it would be interesting to know if you can justify it by reference to case law, or is it an entirely personal view of no more value than anybody else's ?

With regard to the L&B Trust, as others have pointed out (particularly @21B in his post above), the argument has nothing to do with a group attempting to promote an immediate extension against the view of the Trustees.. Rather the opposite, with many members wanting the Trustees to desist, for the present, banging their heads on the Parracombe brick wall, which has cost much money without effect, and for them, before launching on another part of the project, to re-evaluate the overall scheme with a view to better co-ordination of the various groups in the overall L&B "family" and the production of a possible time-line and costings. This is completely within the stated purposes of the Trust : Section 4(1) of the M&A s reads, in part, " To study, compile records on and acquire, build, restore, reinstate, rebuild, create, reconstruct, preserve and maintain railway lines, trackbed, locomotives, rolling stock and other items of railway interest" (my emphasis) so there is no question of what is being requested being outside the bounds of the Trust deeds.

 

@Lineisclear

"New and different ideas should be welcome on any board but once a majority of the Trustees decide on something all of them have to support the majority decision even if they disagree with it. If they can't do so in all conscience they should resign. That's not just a consequence of the Articles but of a fundamental principle of effective corporate governance."

This 'cabinet responsibility' thing is frankly drivel. The duty of a director is towards the shareholders or in the case of a charity towards its objectives - not as you suggest towards the board. What you are proposing is a politburo.

A director who believes the board is not acting properly actually has legal duty to do something about it. Resigning is abrogation of that duty. What he does is up to him, but something he must do.

 

The issue is that it’s both. As a trustee/director, I am collectively responsible for the decisions taken by the board I am a member of. And that does put a limit on how far it is reasonable, for me personally, for my colleagues on the board, or for the organisation to remain in office if I am fundamentally at odds with the decisions being taken.

However, I entirely agree with you that if I believe that the actions of the board are not in the interests of the organisation under its purposes, there is also a duty to seek to effect change rather than just defer to group consensus.

That is all the more the case where the organisation is a charity, and therefore subject to the wider questions of public benefit. If the decisions being taken undermine that public benefit, whether for the charity itself or the sector at large - and I consider that the handling of the elections are in this category - then a wider set of duties also apply, to the extent that voluntarily resigning from the board in such circumstances could be considered a selfish act.


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Your're right that what is being requested is within the charitable purposes. As I 've observed before there is self evident disagreement over the best way forward. Those arguing for an alternative strategy may be right but until the current Trustees are voted out or valid directions are given to them by the membership it's their decision and responsibility.
We'll have to disagree over the interpretation of s172. In simple terms I suggest the normal rule for a company is indeed that the directors' duties are, in part, to run it for the benefit of its members. However, the Trust is not just a company; it's an incorporated charity subject additionally to charity law. It's long settled that charity trustees duties are to run the charity for public benefit and specifically for its charitable purposes Section 172(2) of the Companies Act reflects that by providing that where those purposes apply instead of the benefit to the members references in the Companies Act to the benefit of members will be interpreted as being an obligation to run the company for those charitable public benefit purposes.
The genuine issue is what strategy is best suited to achieving those purposes?

 

If a board is behaving improperly or illegally I agree with you that a director has duties to call it out and should not resign. That's not the same as disagreeing with its proper decisions on policy or strategy where inability to support the majority decision should lead to resignation.

 

I'm not a lawyer but I would argue that the phrase "for the benefit of its members" is misleading and "in the interests of its members" would be a better choice. To my mind "benefit" implies a potential material gain, which is not what members of a charitable organisation are seeking. For most part their interest lies in seeing the organisation develop and flourish in all its activities, not just the financial ones. Under those circumstances it seems excessive to me to suggest that inability to support a specific collective decision should be met by semi-automatic resignation - not all decisions will carry equal weight. I know of one railway where there seems to have been a protracted dispute at Board level over whether or not to sell chips in the station cafe - is it really being suggested that those favouring one half of the argument should resign over it?

 

A better reply than mine thank you.

About the rights of trustees to ignore the wishes of members, I don’t doubt that that duty exists for trustees and directors to act in the best interests of the organisation. But it is a duty not a right. It is clearly (to me) something to be avoided if possible. My own experience is that if it is explained why something cannot be done then generally the members will accept this and then you’re no longer acting without support. If the matter is truly confidential then you must have built sufficient trust for the members to accept your word.

 

That reasonable comment demonstrates that the language of the Companies Act is unhelpful when applied to typical heritage railway corporate structures. The assumption is that member/shareholder interest is in dividend income or capital growth...hence use in the Act of the word benefit. Heritage railway members are usually more altruistic!
The fundamental principle of board corporate governance is that decisions are made collectively by the board. Once decided each board member is equally responsible for them whether they voted for or against it. The issue is then whether an individual dissenting director can accept that. I doubt that whether or not to sell chips in a station cafe is going to involve a feeling that their position is untenable but if they campaigned actively against the decision for which they are equally responsible that might be more serious.
Many Articles of Association include provision for removal of directors who cannot support collective responsibility and refuse to resign. That may require a unanimous decision of all their board colleagues or sometimes a simple majority. The Trust Articles do not include such an express provision but instead give wide powers to the board to adopt rules on such matters.

 

And here we have the heart of the current issues - they are not fundamentally about policy or strategy, but governance and how those policy and strategy decisions get made as, for example, in the decision by the Chair and Secretary (alone) to exclude a validly proposed candidate from election. Or to not abide by their direction.

It's worth reflecting on what it takes to get a matter to the level of a complaint being made to the Charities Commission and cause them to respond within days.

 

@Lineisclear - @35B has set out the problem perfectly. The issue is that the L&BRT is in a position where we do have a "board is behaving improperly or illegally" - so what would you recommend?

 

In an earlier post it was stated that the Charity Commission were investigating.

It is clear that the M and A's needed updating. I feel sure that the Board are aware of this.

 

Given that the version of the M&AoA held on the CC website is many years out-of-date and has not been updated by the Trust, and even the Board's Report to the 'AGM' quoted the wrong older version, then even if the Board are aware of the problems with the M&A0A I've yet to be convinced that they are actually doing anything about them at the moment, let alone with any degree of urgency :-(

No doubt the Board will claim 'pressure of more urgent tasks', but given that matters such as providing up-to-date info to the CC are surely the remit of the Company Secretary, then - as he is not a member of the Board - he can get on with that task whilst leaving the Trustees to worry about about things.

 

As H Cloutt has observed the appropriate course is to ask the Charity Commission to investigate and establish whether that's the case and, if so, what action the Trustees should take. I suspect the Commission won't be too bothered about a short delay in reconvening an AGM, especially given the circumstances,
As I've commented before if a candidate has been validly nominated they should be allowed to stand. I've faced a similar situation where someone about whom the board had serious reservations was proposed and seconded as required by the Articles. We abided by them and the individual was duly elected. As feared unacceptable behaviour at the individual's first board meeting led to a unanimous decision by board colleagues to terminate the appointment (in accordance with the Articles). What was achieved by the whole exercise apart from a lot of avoidable pain and grief?
There seem to be parallels here. It will be interesting to learn of the Commission's view.

 

The issue is not whether the Commission should investigate and assess whether the trustees have acted improperly, but what view the Commission should take of how they have done so. As I think @Tobbes has stated previously, they were directed to act in accordance with the M&As (and @RailWest is right to note the untidiness of filings over a sustained period) and instead pursued an AGM in contradiction of that instruction, with the chair misrepresenting what had been said in the process.

The question of how the right trustees are chosen is a different question. Without rehashing previous debates about (s)election processes, I suggest a good starting point would be to define the requirements for a trustee, and proactively recruit people willing to stand. As for the wrong people, I have experience as a school governor of this situation, and which was deeply uncomfortable. In that case, the law does not allow such rapid ejection and our only choice has been to work with the individual so that they can be effective, rather than a focus for conflict. At the time, I would gladly have done as happened in your experience; with the benefit of hindsight, I am glad that we invested the time and energy to turn the situation round.