Every residents’ association is one, so are most sports organisations, religious orders, non-governmental organisations, even political parties – though few people know what an incorporated association is, or what risks being a member of one poses.
In the eyes of the law, unincorporated associations do not have an independent legal personality. They are “just the collection of members”, says the president of the Law Reform Commission, former chief justice Frank Clarke.
This is the case whether the association is made up of “12 members of a local gardening society or the thousands of people who comprise the membership of a major sporting body”, he says.
Many organisations in the State do incorporate by setting up what are called companies limited by guarantee, which do not have a share capital but they do serve to protect the members’ personal assets if the company is successfully sued.
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However, many small associations, as well as many larger groups such as religious orders and political parties, choose not to incorporate for a variety of reasons, including a desire not to be diverted from their core purpose.
However, this brings risks, and one that few think about. For example, if someone wants to sue an unincorporated club, then in law that person takes the case against the club membership rather than the club.
The more that organisations that are in the field contribute to the consultation process, the less likely it is that we will recommend things that have consequences we hadn’t fully foreseen
— Frank Clarke, president of the Law Reform Commission
In theory, each member is jointly and severally liable for club debts. Normally insurance exists to cover clubhouse injuries or the like, if someone is hurt and successfully sues.
“But say there is a problem with the insurance and the insurance company says we are not covering it for some legitimate reason,” the former chief justice tells The Irish Times.
Technically, under the existing law, the club members would be liable: “If they came looking for you to pay your share of the €2 million, then I think we would immediately have a huge amount of public interest in these questions,” he says.
Another issue that arises with unincorporated associations is that a member who suffers an injury cannot take a case against the association because, in the eyes of the law, that is viewed as trying to sue yourself.
And it goes on. Members of an unincorporated association can be held vicariously liable for the wrongdoing of other members in which they have played no part, or had no knowledge.
Unincorporated associations cannot hold property and need to have a person or body to hold property for them in trust. Unincorporated associations also cannot be party to a contract.
Suppliers and contractors may believe they are contracting with a club, but that is not the legal reality. If there is a dispute with a contractor that goes to court, the case is taken against the members, not the association.
The Law Reform Commission is planning to draft a report for early next year which will provide recommendations for changes to the Oireachtas. A consultation process currently under way has been extended to May 15th, such is the level of interest. Mr Justice Clarke says the commission is very anxious not to interfere unnecessarily in the work of clubs and associations that do so much good work and contribute so much to civil society.
“We are trying to balance three things,” he says. “One is that there is clarity, so people know where they stand. Secondly is to deal with that sort of situation [club members finding themselves having to pay a €2 million damages bill], before it happens if you want. And thirdly, to be mindful that overregulation might discourage people from doing things that are very good and very useful.”
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The consultation process is important, he says, because it allows people involved in sporting, religious and other organisations to consider how any potential changes set out in the consultation paper prepared by the commission might affect them. The commission wants such people to make their concerns known to it.
“I think our biggest concern is to ensure that we don’t do something that has consequences that make things more complicated and worse,” says Mr Justice Clarke. “Sometimes measures that are designed to make things easier don’t in the end make them easier, and it is very much an area where the devil is in the detail.
“The more that organisations that are in the field contribute to the consultation process, the less likely it is that we will recommend things that have consequences we hadn’t fully foreseen.”
The commission has already ruled out recommending mandatory incorporation for associations that enter contracts, hold property, have employees, or have volunteers who carry out work similar to employees.
“A legal obligation to incorporate may interfere with the freedom of such bodies to meaningfully associate in the pursuit of collective goals and to participate in public life,” the consultation paper says.
“In non-democratic countries, sophisticated laws with burdensome NGO registration procedures and complex regulations enable invasive government control of NGOs. Such measures have been used to curtail civil society groups and undermine freedom of association and dissent.”
Once the commission report is published, it will be up to the Oireachtas to decide what changes, if any, should be introduced, including changes that could make it easier for people to sue such unincorporated associations.
Currently, it can be extremely difficult for someone to sue if the body does not choose to put forward a nominee to represent the association for proceedings, as has happened with the Christian Brothers facing actions for sexual or physical abuse.
The Law Reform Commission will also look at how to change the law so that people who sue successfully can if necessary go after property held in trust for unincorporated associations – properties that were put out of reach by many religious bodies over the last 20 years.
Most political parties are unincorporated associations, which is something the politicians may also focus on when deciding what recommended changes, if any, they decide to introduce.
A copy of the consultation paper is available on the website of the Law Reform Commission.
