The National Tourism Development Authority v Coughlan & Ors [2009] IEHC 53

Facts
This case, which wasn't a tax case, concerned a trust that was set up to own land in Killarney on which golf clubs were built. The original course was constructed in 1938 by the Earl of Kenmare. At this time Killarney Golf Club Limited (the company) was incorporated to hold these lands and the earl retained 75% of the shares in this company. The club itself was run by the Killarney Golf and Fishing Club which was an incorporated association. Bord Failte bought the land from Beatrice Grosvenor (successor to the Earl of Kenmare) in 1968 at a nominal value and gave a substantial part of it to Killarney Golf Club to extend its golf course. In 1969 Mrs Grosvenor agreed to transfer all her shares (except ten ordinary shares) in the company to Bord Failte. Bord Failte couldn't legally hold the shares in the company so it nominated an employee to hold them on its behalf. Concerns arose in connection with staff holding assets on trust for Bord Failte so in 1984 Bord Failte decided to sell the shares. They contacted Mrs Grosvenor asking if there were moral obligations regarding the land. She stated that both she and the directors felt that the shares should be held in perpetuity in a type of trust in order to permanently protect the land from any possibility of exploitation arising from private ownership. She suggested Bord Failte acquire all the shares from the employee and transfer the shares to such a trust.

However, a trust cannot be set up in perpetuity unless it is a charitable trust.

Bord Failte set about establishing this trust, the subject matter of which was the shares in the company held by Bord Failte.

The stated object of the trust was to promote the amenities of the club for its members and visiting golfers. A person joining the club didn't buy shares in the company, they paid a joining fee of €7000 or €100 a day green fees.

Decision
The question was - whether or not the trust was a charitable trust and therefore whether it could exist in perpetuity

The case law on charities was examined. The judge decided that while the promotion of tourism was the function of Bord Failte, this didn't mean that tourism "is a class of charitable trust beneficial to the community". It also didn't mean that anything Bord Failte did was necessarily charitable.

Mr Justice Charlton noted that the golf club only benefitted its members and those who paid green fees. It did not benefit the community as a whole!

The judge noted that any economic activity could be regarded as benefitting a community in some way. He acknowledged that all the people involved were motivated towards the betterment of society. However, the clear intention was to use the land as a golf course, not a public area such as a park and this golf club could not be the subject of a charitable trust. An exception to this would be if a trust was set up for the use of a golf course by disabled people.

Conclusion
For a trust to enjoy charitable status, its object must be to benefit the community as a whole and not one particular group. Tourist infrastructure will not usually meet this requirement.