Regatta – Regatta?

Regatta – Regatta?

• a report by TIM HICKS FCA on the organisational status of Whitby Regatta, outlining his thoughts on the risks attendant upon allowing the present confused state of affairs to continue.

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Whitby Regatta – Background

Being a responsible local news magazine, Real Whitby likes to encourage local businesses and do everything it can to encourage the prosperity of the local economy. This is particularly true of the Whitby Regatta, an event of immense historic, cultural and commercial importance to Whitby, probably the oldest sea regatta on the northeast coast, attracting 20,000 visitors to the town and run entirely by local volunteers.

Two years ago, alarmed by fundamental changes that had taken place in the organisation of the Regatta, we raised our concerns with the Town Council publicly in Real Whitby, but they were not addressed.

Consequently these issues still exist and Real Whitby is now re-entering the ring in 2014 to try and have them resolved, in the wider public interest, but also to help protect the volunteers that work so hard to make the Regatta a success. Although the Regatta has always been run on a voluntary basis by the Regatta Committee – who, despite working hard, receive no remuneration or payment as a cultural event – it has never been formally registered as a charity.

The changes I refer to were made on the basis that they would protect the members of the Whitby Regatta Committee from any liability by incorporating the Regatta as charitable trust. So a Limited Company was formed (Whitby Regatta Limited, or WRL) and the organisers, instead of being unpaid volunteers from the community working through the Regatta Committee as before, would henceforth be Officers/Directors of the Company, protected by the limited liability of the Company.

However, at that point it appears that things went seriously wrong.

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The operation of the Regatta since 2011 under the new arrangements

The operation of the Regatta has become bizarre in the extreme.

The official position is that WRL is a separate legal entity that took over the functions of running the Regatta on incorporation on the 5^th July 2011, to give the members of the Regatta Committee the protection of limited liability and, at that point, the Regatta Committee ceased to exist and its duties were passed to WRL.

However, instead of a seamless switch from being run by the Regatta Committee to being run by the new Whitby Regatta Limited, the Whitby Regatta Committee continues to exist and both the Committee and Whitby Regatta Limited hold out that that they both run the Regatta, simultaneously. Incredibly, the official Whitby Regatta website does not even mention the existence of Whitby Regatta Limited anywhere.

http://www.whitbyregatta.co.uk/history.html.

This is legally impossible. They cannot both exist and run the Regatta at the same time.

The objects of the Whitby Regatta Limited empower it to remunerate Directors and the objectives of the Company are very wide-ranging, commercial, not charitable, and do not mention Whitby Regatta at all:

OBJECTS

4.1 The Company’s objects are (1) To promote hold arrange take part in yachting and other marine activities events meetings trials competitions and the like; to do all such things as may be deemed expedient for the promotion of such sports and pastimes to establish maintain promote and operate an organisation club school or academy yachting and yacht racing or like events and to protect advance and further the interests of and provide facilities for yachtsmen and to provide information advice and assistance on or in all matters incidental to or affecting the use of yachts and marine craft and the laws and regulations appertaining thereto.

4.2 [this clause is left blank]

4.3 (2) To carry on all or any of the businesses of promoters organisers conductors of races competitions sporting and other entertainments and enterprises of every description (whether or not connected to yachting) proprietors and operators of marinas moorings slipways causeways landing stages boat house foreshore rights and wet and dry docks and repair yards operators and proprietors of caravan and camping sites operators of markets auctions and sales lock-up garages motorcycle trailer and car parks and all accommodation and conveniences required in connection therewith cafe restaurant and hotel and motel proprietors refreshment caterers and contractors and things of all kinds necessary or useful for carrying on the foregoing businesses or any of them or likely to be required by customers of or persons having dealings with the Company.

So if the Regatta Committee still exists and runs the Regatta, and WRL is not a Charitable Trust, why bother spending all of that money on setting up WRL, a company that does not even include any mention of Whitby Regatta in its objectives? 

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The dangers of the current situation.

There are a number of concerns over this situation, some of which may open up the members of the Whitby Regatta Committee and the Directors of WRL to serious liabilities, as follows:

• The Regatta Committee are collecting donations from the public on the basis that they are charitable donations, when the Regatta Committee does not have charitable status.

• The donations collected by the Regatta Committee, it appears, are then passed on to WRL. Whilst WRL is being held out locally as a charity, there is no documentary evidence of any charitable status at all.

• I cannot find anywhere a statement of how the Regatta has become a charity and the official Whitby Regatta website does not mention charitable status: http://www.whitbyregatta.co.uk/ It therefore appears that all of the goodwill associated with the name of the former Whitby Regatta and its logo, which may have a value in its own right, and control over a major sporting event have been passed to a commercial organisation.

• If the Regatta is insured, it is unclear which of the two organisations (the Regatta Committee or WRL) has taken out the insurance. If the Regatta Committee has taken out the insurance, then it may be invalid, because official responsibility for the Regatta has been transferred to WRL, and the Regatta Committee therefore has no insurable interest. Alternatively, if WRL has taken out the insurance, then the bizarre way the Regatta is operating may also invalidate the insurance, because nothing in the memorandum and articles of WRL (above) states specifically that WRL is responsible for the Whitby Regatta, and according to the official Whitby Regatta website, the Committee runs the Regatta not WRL. An insurer may therefore refuse to pay out for a claim that is presented, on the grounds that it can claim the liability relates to the Regatta Committee, not to WRL, and it has no responsibility for the liabilities of the Regatta Committee’s activities.

• In short, it is not clear if the Regatta is adequately insured.  If it is not, then in the event of a visitor to the Regatta having an accident and suing, based on the information on the website the action may be against the members of the Whitby Regatta Committee who have unlimited liability, not WRL, which has limited liability.

• The Regatta Committee is managing the day to day activities of the Regatta, which is the duty of the Directors of WRL. This means that the members of the Regatta Committee could be designated as Shadow Directors, giving them exactly the same liabilities as the WRL Directors. So for instance, if the company enters into insolvency, a liquidator can pursue actions against every Director, including the members of the Regatta Committee in their capacity as Shadow Directors.

• Councillor Jane Kenyon-Miller is a very prominent Director of WRL. She is also the Chief Financial Officer of a bankrupt company in the United States – Belvedere Computers Inc – which she does not declare on her Register of Interests as a Scarborough Borough Councillor. Quite apart from the issues of whether anyone with that background should serve as a Company Director in an organisation that runs a flagship event for Whitby, the Board of Directors of Whitby Regatta act as a body, not as individuals. The presence on the Board of someone with this background tarnishes the Board as a whole and affects the credibility of everyone on it, because the Directors and the members of the Regatta Committee must all know of the adverse national press comment on Councillor Jane Kenyon-Miller. Yet they have maintained Councillor Jane Kenyon-Miller on the Board, despite knowing that she is openly alleged to be involved in illegality and has never denied or commented on these allegations. Further, in the event of future financial problems or legal action against WRL, her presence on the Board could establish an ongoing course of conduct with Belvedere Computers Inc which may affect the credibility of the Company and its Directors.

• The Regatta Committee are collecting money in the form of charitable donations and, it appears, passing it on to WRL after settling some of the expenses directly. So it could appear to  HM Revenue & Customs that, because there is no charitable status, the members of the Regatta Committee are conducting an unincorporated trading business – particularly as there is inevitably a lot of cash involved in the Regatta. This could then lead to a tax assessment being raised against the Committee members.

Whilst it could be there is an explanation for this, as things currently stand, all of this appears to me to be deeply unsatisfactory and shrouded in mystery.

I would call on the Directors of WRL and/or the members of the Regatta Committee to enter into debate and clear the air by posting their responses to the above concerns in the Comments boxes below.

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