Failure to reimburse charity delivers 'unexpected windfall'
Sir Paul and Lady Judge had been trustees of a charity which Sir Paul had founded and donated to...
The charity had invested in a company in which he had a substantial personal interest. This later collapsed. There was a risk that the Charity Commission would require the charity to be reimbursed for the sums lost because as trustees, the couple had invested its funds to Sir Paul’s indirect benefit. There was also a potential Gift Aid repayment liability. When the couple divorced in 2001, Lady Judge was awarded 38 per cent of the couple’s assets, totalling £29.6m but recalculated as £15.6m once the overall charity repayment liability, estimated as £14m, was deducted. It eventually became clear that Sir Paul’s donations been made on the condition the money was then invested into his companies, and because of this, there was no joint liability as trustees. The Gift Aid liability of £600,000 to HMRC, however, still stood.
Lady Judge tried to renegotiate her settlement on the grounds of unintentional but material non-disclosure at the time, arguing that she should receive a £5.6m share of the retained cash as Sir Paul never did reimburse the charity for its loss. However, the judges ruled that the original court order could not be reopened. Lord Justice Collins commented: ‘Sir Paul Judge was presented to the court as a successful and eminent businessman. But I remain disturbed about the way in which he used the charity to fund his own enterprises while simultaneously taking advantage of Gift Aid, especially when coupled with the relativity with which he seems to approach the concept of moral obligation… Lady Judge expressly disavows any deception of the court by Sir Paul in 2001, and I am satisfied that the possibility that there might have been no liability was in the arena. In the end I am persuaded that, despite what is an undeserved windfall for Sir Paul, the appeal should fail’.
Anne-Marie Judge (Lady Judge) v Paul Rupert Judge (Sir Paul Judge) (1) and Ogier Trustees (Jersey) Limited [2008] EWCA Civ 1458, 19 December 2008
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