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Trustee liable to account for auction ‘cock up’

19 June 2012

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A trustee whose own company had provided merchant services for his charity’s fundraising event was personally liable to account for the shortfall of unpaid pledges, the High Court has ruled.

Tony Woodhams, the court said in Friends of Burbage School Ltd v Woodhams [2012] EWHC 1511 QB, was “an unsatisfactory witness” and should repay the claimant charity £15,000 in missing revenue.

In December 2006 Friends of Burbage School Ltd, a charity set up to help raise funds for a new nursery at the school, held the ‘Ice Ball’ at the Hilton Hotel on Park Lane, London.

The event included an auction, revenue from which would be collected and processed by one of the trustees, Tony Woodhams, through his company, Concierge.

The auction raised £106,000 for the charity. This included two tickets donated by Mr Woodhams to attend a dinner with David Beckham.

The tickets cost £250 each and Mr Woodhams himself bid for two, which he got for £5,000 but never paid over to the charity – the event organiser crossed out the figure in the account of the evening, writing the words “cock up” alongside.


It was “common ground”, HH Judge McMullen QC said, that Mr Woodhams was “trying to drive up the price by bidding for it himself and then got stuck with it at a higher price than he wanted to pay and indeed he probably never wanted the tickets anyway”.

But looking at the personal nature of the relationship between a charity and trustee who provides services through his own company the judge said the charity should be able to look at the trustee to deliver the service, not his company.

“Unless the contract is made between the charity and the company, the charity looks to the trustee who has offered the equipment or the staff to come good on his promise,” he said, before adding: “If the equipment is not in place on the day, the charity would feel let down by the trustee and not by the company.”

In this particular case, the judge continued, the trustees “were entitled to look to Mr Woodhams to account for the money received in this way into Concierge’s merchant services account. He held himself out as a person who could facilitate this system on the night.

“As he accepted finally in evidence he was a trustee and owed fiduciary duties to the trust. These monies came into the Concierge account and he impliedly undertook to account to the charity for those receipts,” the judge said.
 

The judge ordered Mr Woodhams to pay the charity for the tickets and other unpaid bids, the whole amounting to £15,000. 

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