- At the Annual General Meeting (“AGM”) of the National Horseracing Authority (“NHA”) held during January 2015, Adv Brett Maselle brought to the attention of the meeting that there had been a substantial underpayment by the NHA to the Trainers’ and Riders’ Benevolent Fund. Adv Maselle highlighted the fact that whilst the Rules (prior to January 2013) stated that “All fines and deposits forfeited shall be transferred from the general funds of the NATIONAL HORSERACING AUTHORITY to the funds of the Trainers’ and Riders’ Benevolent Fund” only 25% of the funds had been transferred and therefore he alleged that the money had been misappropriated.
2.The NHA undertook to investigate the matter and to report its findings to the National Board, who will then decide how to deal with the matter.
- The investigation has been done and the information set out hereunder has come to light.
- The Rules of the NHA make provision for the establishment of a fund known as The Trainers’ and Riders’ Benevolent Fund (“the Fund”).
- The Fund receives money from the NHA. Prior to being amended in January 2004, the relevant Rule dealing with payment to the Fund read as follows:
“95.4 All fines and deposits forfeited shall be transferred from the general funds of the NATIONAL HORSERACING AUTHORITY to the funds of Trainers’ and Riders’ Benevolent Fund and the account of the ACADEMY in such proportions as the NATIONAL BOARD, in its discretion, may determine.”
- It is therefore apparent that the fines and deposits forfeited (“the fines”) had to be used for two purposes, namely the Fund and the Academy.
- As appears from the historical financial statements of the NHA and as verified by the auditors (Horwath Leveton Boner) the fines were utilized in the ratio of 15% to the Fund and 85% to the Academy. This is borne out by the statements which were inspected for the years 1997, 1998, 1999, 2000, 2001 and 2002. During these accounting periods the Academy was part of the integral operations of the NHA and was disclosed as a separate cost centre and therefore the Academy allocation was reflected as part of the NHA’s income.
- At a National Board meeting held on 31 January 2002, the following resolutions were adopted:
8.1 The percentage fines allocated to the Fund be increased from 15% to 25%.
8.2 The balance of the fines would continue to be reflected in the NHA income which would effectively offset part of the disciplinary and legal costs incurred by the NHA (“disciplinary costs”).
- It is clear that in changing the percentage to be allocated to the Fund, the National Board was exercising its discretion as provided for in Rule 95.4.
- The new allocation of 25% of the fines was henceforth implemented, together with the offsetting of disciplinary costs against the remaining percentage of the fines. As appears from the financial statements of the NHA, this percentage allocation continued to be implemented until a Rule change in January 2013, which will be dealt with later.
- Responsibility for contributing toward the funding of the Academy ceased in 2002. In a handwritten annotation by the late Mr Ray Harper, who was asked for his comments on the changes to be implemented, he commented as follows regarding Rule 95.4:
“This Rule is to be amended. The Academy no longer receives any portion of the fines.”
- During 2004, a number of the NHA Rules required amendment to reflect changes which had been agreed to by the National Board, exercising its powers in terms of clause 16.2.1. As the Academy no longer fell under the auspices of the NHA, a change to Rule 95.4 was required as was indicated by the annotation by the late Mr Harper.
- To give effect to the resolutions which had been adopted by the National Board and to record the fact that the Academy was no longer funded by the NHA, Rule 95.4 needed to be amended to reads as follows:
“95.4 All Twenty-five percent of fines and deposits forfeited shall be transferred from the general funds of the NATIONAL HORSERACING AUTHORITY to the funds of the Trainers’ and Riders” Benevolent Fund and the account of the ACADEMY in such proportions as the NATIONAL BOARD, in its discretion, may determine”.
- Unfortunately in giving effect to the amendment, it was incorrectly recorded as follows:
“95.4 All fines and deposits forfeited shall be transferred from the general funds of the NATIONAL HORSERACING AUTHORITY to the funds of the Trainers’ and Riders” Benevolent Fund and the account of the ACADEMY in such proportions as the NATIONAL BOARD, in its discretion, may determine”.
- It will immediately be apparent that this amendment did not accurately reflect the resolution of the National Board adopted on 31 January 2002 and the payment allocation which had been implemented by the NHA for a considerable period of time. As mentioned above, the NHA continued to allocate 25% of the fines to the Fund.
- The error was also not picked up when the Rule was again amended in 2013 to reduce the allocation from the 25% (as implemented over the years) to 20%.
- It was only as a result of the comments made by Adv Maselle at the 2015 AGM that this incorrect recordal in the Rules became known to the NHA.
- It is clear from what has been outlined above that there has been no misappropriation of money which was to be allocated to the Fund. On the contrary, it clearly shows that the NHA strictly implemented the resolution passed by the National Board.
- By reason of the fact that the Rule was amended in 2013 to record what the current position is, namely an allocation of 20% of fines to the Fund, no purpose will be served to rectify the Rule historically. Therefore the National Board passed a resolution at the National Board meeting held on 19 March 2015 recording the fact that the decision taken in January 2002 to allocate 25% of fines to the Fund was not correctly recorded in the amendment to the Rule. Notwithstanding the incorrect recordal of the decision taken by the National Board, the implementation of the decision taken was in fact correct.
- A further question that was considered was whether there is a possibility of a claim arising against the NHA by virtue of the incorrect recordal of the decision taken by the National Board.
- It can be argued that Rule 95.4 represents a contract for the benefit of a third party (the so-called “stipulatio alteri”). Attached is a memorandum, prepared by the NHA’s legal advisors who pointed out that the Fund (and its participants), even if it can be argued that it was the third party to a stipulatio alteri, would not be entitled to “accept” more than what was intended to be offered, namely 25% of the fines.
Click on stipulatio alteri
