Director Liable to Charity for Company's Failings

A company director whose company provided services to a charity of which he was a trustee found himself faced with a claim from the charity that he was liable to it when the company failed to fulfil its obligations.

The saga started when the trustee made available to the charity electronic merchant services to enable it to accept electronic payments when it held a charity auction. He also donated two tickets to a ball that was to be attended by David and Victoria Beckham. The tickets had a face value of £250 each, but he ‘bid them up’ at the auction. However, as no one was willing to pay more than his final bid of £5,000, the tickets were knocked down to him.

The trustee had not intended to win the tickets and evidence was given that the charity trustees were willing to forgive him the sum, which was not remitted to the charity.

Later, the trustee provided merchant services to the charity in respect of another similar event. This time, there was a shortfall of some £15,900 between the total of the bids collected at the charity auction (after service charges) and the sum remitted to the charity by his company.

The High Court dismissed the charity’s claim in respect of the erroneous auction bid, but held the trustee personally liable for the later shortfall in the sum remitted to the charity compared with the sum collected.

If you are a director of a company and arrange for the provision of services to a charity of which you are a trustee, you may be held personally liable for any losses suffered by the charity in the event that your company fails to meet its commitments – even if the services are provided free of charge.

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