Harris, and Others v Sharp, and Another (1st Defendant/Appellant) (2nd Defendant/Respondent)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE FOX,LORD JUSTICE STOCKER,LORD JUSTICE TAYLOR |
| Judgment Date | 21 March 1989 |
| Judgment citation (vLex) | [1989] EWCA Civ J0321-2 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 89/0297 |
| Date | 21 March 1989 |
[1989] EWCA Civ J0321-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE MERVYN DAVIES)
Royal Courts of Justice,
Lord Justice Fox
Lord Justice Stocker
Lord Justice Taylor
89/0297
CH 1985 H. No. 5689
MR LEOLIN PRICE. Q.C. and MR J.W. BONNET (instructed by Messrs. Roland Robinsons & Fentons, Solicitors, Blackpool) appeared on behalf of the Appellant.
MR D. MALLARD (instructed by Messrs. Leslie Harris Priestley & Fisher, Solicitors, Blackpool) appeared on behalf of the Respondents/Plaintiffs.
MR P. CRAMPIN (instructed by The Treasury Solicitor) appeared on behalf of the Respondent/2nd Defendant.
This is an appeal by the first defendant, Mr Robert Sharp, from a decision of Mervyn Davies J. On 6th September 1982 Mr Sharp pleaded guilty at Preston Crown Court to all of five counts on an indictment of conspiracy to defraud a charity known as the National Heart Research Fund of unspecified sums of money. On 8th September 1982 Mr Sharp signed and handed to his solicitors a memorandum in writing dated 8th September 1982, together with a bankers draft for the sum of £50,000. The memorandum was in the following terms—and for convenience I have numbered the paragraphs:
(1)"I Robert Roy Sharp instruct you my solicitors Messrs. Leslie Harris Priestly & Fisher of my free choice and will having discussed the matter with you and Counsel to receive from me a bankers draft herewith in the sum of £50,000. This sum is to be held by you in your Client account or other appropriate investment. I give you Leslie Harris Priestly & Fisher irrevocable authority to make a gift of that sum to provide a Fellowship in Paediatric Surgery at the Liverpool Royal Children's Hospital, Myrtle Street, Liverpool.
(2) "This Fellowship is to be set up and its scope determineed, under the guidance of Mr David Hamilton Consultant Paediatrician at the said hospital (if he so agrees or in the alternative the Head for the time being of the Department of Paediatric Surgery at the University of Liverpool). The said sum is to be regarded as being held by you my solicitors for the said charitable purpose.
(3) "I express the wish that it should be so utilised, if possible, by consideration of the incidence of taxation so as to produce the maximum financial benefit to the said charitable cause by whatever legal means are appropriate by, for example, deed of covenant or otherwise in order to achieve the said purpose and create a charitable trust.
(4) "I further authorise you my solicitors and hereby give you sole, absolute and irrevocable discretion to appoint two or more trustees as you think fit for the purpose of carrying out and executing the said charitable purpose.
(5) "I have been advised by yourselves and Counsel, and I accept the position, that the aforesaid may be of no benefit whatsoever to me as regards any sentence that I may receive at the Preston Crown Court upon the indictment to which I have pleaded guilty".
On 13th September 1982 Mr Sharp was sentenced at the Preston Crown Court to 30 months imprisonment.
In his plea of mitigation on behalf of Mr Sharp, leading Counsel referred to the transaction involving the memorandum and the payment of £50,000. On 15th September 1982 the plaintiffs wrote to the Liverpool Royal Children's Hospital (the "hospital"), enclosing a copy of the memorandum, and asking for instructions.
On 8th November 1982 the Mersey Regional Health Authority—to which the matter had been referred by the hospital—wrote to the plaintiffs stating that the Liverpool Health Authority would be delighted to accept the £50,000 for the purpose of providing a Fellowship in Paediatric Surgery at the hospital. The letter then continued:
"However, the point occurs to me as to the source from which the funds of £50,000 are derived. As I understand it, your client was charged with various fraud offences in relation to a charity which was formed for the purpose of providing monies for heart research."
On 19th November 1982 the plaintiffs wrote stating that their instructions were ".…that the £50,000 represented Mr Sharp's life savings over many years" and was certainly not part of any ill-gotten gains.
On 6th December 1982 the Legal Adviser to the Mersey Regional Health Authority wrote that he was "taking formal instructions from the Authority in the light thereof".
On 30th October 1983, no further communication having been received from the Health Authority in the meantime, Mr Sharp wrote to the Health Authority saying he understood that the source of the sum of £50,000 was the subject of investigation and that, in the circumstances, it might be advisable for the Authority to decline the gift.
On 19th December 1983 the Legal Adviser to the Mersey Regional Health Authority wrote saying that the delay had been caused by the inability to obtain proper instructions from the Liverpool Health Authority. In the second paragraph of the letter the Legal Adviser said this:
"Fortunately, these are now to hand and I quote from a recent letter from the Authority:
'The Authority would be pleased to accept the donation, provided there is an assurance that the money is from bona fide sources. This point would, I think, need to be reaffirmed. It would, however, be necessary to modify to some extent the purpose of the donation, originally identified by Mr Sharp".
I interpose here to say that the proposed variation arose from the fact that the estimated income from the sum of £50,000—that is to say £5,000 per annum—was half the salary required to pay a Fellow. Therefore it was suggested as there was an existing Fellowship in its ninth year but owing to restricted funds its continuation was uncertain—Mr Sharp's fund should be utilised in supporting a second Fellow in alternate years and also as a back-up for the existing Fellowship.
On 7th February 1984 Mr Sharp replied stating that he was not prepared to give any assurance as to the source of the money, or to allow any change to the purpose or terms of the trust.
On 2nd April 1984 the Mersey Regional Health Authority wrote to the solicitors stating:
"In view of the latest developments, and particularly in view of the contents of Mr Sharp's letter to yourselves dated 7th February, Liverpool Health Authority does not wish to accept your client's offer".
On 31st October 1985 the originating summons, from which this appeal is brought, was issued by the plaintiffs. On 24th February 1986 the Treasury Solicitor, acting on behalf of H.M. Attorney General (who is the second defendant to the originating summons) wrote to the Mersey Regional Health Authority stating that the trustees of the National Heart Research Fund had now agreed "pursuant to Section 15 of the Trustee Act, 1925 that they would abandon any claim they might have to the £501,000 paid by Mr Sharp".
Regarding the matter of the sufficiency of funds, the Treasury Solicitor said: "Counsel had advised that £50,000 was sufficient to fund a Fellowship for several years if both capital and income were resorted to; alternatively, the Fellowship might suffice to give sufficient support to a Fellow who had additional income from some other charitable or other source." In these circumstances, the Authority was asked to reconsider its decision.
On 11th June 1986 the Mersey Regional Health Authority wrote to the Treasury Solicitor stating that the Liverpool Authority was now prepared to change its views and accept the necessary monies to set up the trust.
On 9th October 1986 the Treasury Solicitor wrote to the Mersey Regional Health Authority asking for confirmation
(1) that the Liverpool Authority and the hospital would recognise the Fellowship in paediatric surgery created and endowed by Mr Sharp's fund; would permit Mr David Hamilton, or alternatively the Head of the Department of Paediatric Surgery in the University to determine the scope of the Fellowship; and
(2) the income of the fund would be sufficient to enable the Fellowship to be created—for example, by supporting a Fellow in alternate years.
These confirmations were given by the Mersey Regional Health Authority in its letter of 8th January 1987. The Authority stated that the fund would not be sufficient to enable the Fellowship to be filled continuously, and that the Liverpool Health Authority proposed to offer the Fellowship on an ad hoc basis for a fixed term, or possibly on alternate years.
The originating summons asks:
"(1) That it may be determined: (a) Whether the said Memorandum and the transfer of £50,000 to them by the first defendant constituted the plaintiffs (a) trustees or (b) agents for the first defendant
"(b) Whether, if the said Memorandum created a trust, that trust is a valid charitable trust or failed for initial impossibility
"(c) Whether, if the said Memorandum created a charitable trust which failed for initial impossibility the said Fund is nevertheless applicable cy-pres or results to the first Defendant".
Mervyn Davies J. held:
(1) that the Memorandum and the transfer constituted the plaintiffs trustees;
(2) that the Memorandum created a valid charitable trust;
(3) that if the trust had failed for initial impossibility, the trust fund would result to Mr Sharp.
Mr Sharp appeals against determinations (1) and (2), and the Attorney General appeals against determination (3).
It is submitted on behalf of Mr Sharp that the memorandum merely created an agency which...
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