THE HIGH Court has rejected arguments by Killarney Golf Club Ltd that it is a charitable trust, a decision which is expected to lead to the trustees’ majority shareholding in the club’s €9.4 million lands being returned to Fáilte Ireland.
Mr Justice Peter Charleton’s ruling on the status of the club yesterday means the 1987 transfer to the club’s trustees of Bord Fáilte’s majority 73.4 per cent shareholding in the €9.4 million club lands was invalid.
The judge said his decision meant the club would, in conjunction with the trustees and Fáilte Ireland, now have to reorder its affairs.
Mr Justice Charleton ruled the activity being carried on by the club “cannot be regarded as anything other than sport and recreation” and while all involved were “genuine” and “decent” people motivated towards the betterment of society, a golf course could not be the subject of a charitable trust under ordinary circumstances.
He said membership of the club was exclusive and, while the club benefits the community and attracts tourist traffic, it was “still an ordinary golf club” which one may pay €7,000 to join or, if visiting, may use by paying substantial green fees.
He said this trust was set up to benefit tourism but tourism had never been held to be a charitable purpose, and various legal cases indicated the more exclusive a facility the less it was to be considered charitable. While a golf course was a nice facility and could be a tourist draw, it was not there to benefit other than its members and those who could afford to pay green fees as visitors.
While the manner in which the club interacted with the trustees of the course had elements hinting at a charitable purpose, including that dividends were not paid to shareholders but go back into the club to enhance facilities, a tourist enterprise was an economic enterprise.
He said the intention of the trust was to use the lands as a golf course, as opposed to a public area, and the trust document specifically denied entry to the lands to those who wished to wander them or take refreshment on them. It did not help the trustees’ argument for charitable status that the facility was open to tourists for a high fee or that tourists may travel to use it.
He was giving his judgment on proceedings by Fáilte Ireland to establish whether the 1987 transfer of the majority shareholding held by Fáilte Ireland’s predecessor, Bord Fáilte, in the lands owned by the club to the club’s trustees was valid or not.
Fáilte Ireland brought the case after receiving legal advice the trust is invalid.
The club’s trustees argued the trust was valid because it was a charitable trust for the promotion of tourism in the Killarney area with a consequent public benefit.
Fáilte Ireland contended the club was effectively a private golf club, with any profits generated being for the benefit of the club and its members and put back into the club for that purpose.
The case arose after Bord Fáilte in 1968 bought 125 acres of the estate of the Earl of Kenmare from his grandniece and provided the substantial part of the lands to Killarney Golf Club Ltd (KGC) to lay out another golf course. Concern later arose as to whether Bord Fáilte could hold shares in KGC and Bord Fáilte later in May 1987 created a trust.
In his judgment, Mr Justice Charleton said he was satisfied tourism was the single most important industry in Killarney and the golf course had played a major role in attracting tourists. The problem was, while Fáilte Ireland’s clear object in creating the trust was the promotion of tourism, this did not mean tourism was a class of charitable trust beneficial to the community or that anything done to promote tourism was necessarily charitable.
He said the law had not regarded trusts for sporting objects as charitable.
