Allan Attwood (Petitioner) v Geoffrey Maidment & Sarah Maidment & Annacott Holdings Ltd
| Jurisdiction | England & Wales |
| Judge | JUDGE HODGE QC |
| Judgment Date | 29 July 2011 |
| Neutral Citation | [2011] EWHC 2186 (Ch) |
| Court | Chancery Division |
| Date | 29 July 2011 |
| Docket Number | Case No: 11578 of 2008; 20858 of 2009 |
[2011] EWHC 2186 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
Strand
London WC2A 2LL
His Honour Judge Hodge QC Sitting as a Judge of the High Court
Case No: 11578 of 2008; 20858 of 2009
In the Matter of Annacott Holdings Limited
In the Matter of Tobian Properties Limited
MR ANDREW CLUTTERBUCK (instructed by Stockler Brunton) appeared on behalf of Mr Attwood, Ms Heard and Tobian Properties Limited
MR THOMAS GRANT and MR JAMES SHEEHAN (instructed by Macfarlanes LLP) appeared on behalf of Mr Maidment, Ms Maidment and Annacott Holdings Limited
This judgment, delivered orally on the last sitting day of the Trinity Term 2011, is divided into eight chapters as follows: (1) Introduction, (2) The trial, (3) The witnesses, (4) The chronology of events, (5) The ownership of Annacott, (6) The Tobian petition, (7) The Annacott petition, and (8) Conclusion. I would emphasise that, although structured in this way, the contents of each chapter have informed the terms of the entire judgment.
Chapter 1—Introduction
This is the hearing of two petitions presented under section 994 of the Companies Act 2006. That section, contained within Part 30 of the 2006 Act, enables a member of a company to apply to the Court for an order under Part 30 of the 2006 Act on the ground that the company's affairs have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least the petitioner).
By section 996 of the 2006 Act, if the Court is satisfied that such a petition is well-founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of. That may include authorising a derivative action to be brought in the name and on behalf of the company, or providing for the purchase of the shares of any members of the company by other members.
This judgment is confined to the issue of whether there has been unfair prejudice in relation to the affairs of either of the two subject companies. The question of what relief will flow from any finding of unfair prejudice will be reserved to a further hearing before me.
The first petition was presented in respect of Annacott Holdings Ltd ("Annacott") on 22 December 2008. The petitioner is Mr Allan Attwood, who is, or was, an estate agent. He is now 39 years of age. He is the registered holder of 2,500 shares in Annacott, representing 50 per cent of its issued share capital.
The first respondent is Mr Geoffrey Maidment. He was a banking officer and is now 42 years of age. He holds 2,499 shares in Annacott and is its sole director.
The second respondent is Ms Sarah Maidment, who is Mr Maidment's sister. She holds the remaining one issued share in Annacott.
The principal complaint in the Annacott petition is that Annacott was formed to invest in residential properties on a buy-to-let basis, primarily in the east of London, yet Mr Maidment has sold its investment properties (46 in number) to himself at what is said to be an undervalue, alleged to be in the order of just under £2 million (after adjusting for the short length of certain unexpired leases).
It is further said that Mr Maidment claims to have invested sums totalling over £1.35 million in a company incorporated in the Turkish Republic of North Cyprus called MLP (Cyprus) Limited (to which I shall refer as "MLP"), with a view to developing a complex of flats in North Cyprus, which investment Mr Maidment says is now worthless.
It is said by Mr Attwood that, in fact, there was no investment in MLP, and that Mr Maidment has misappropriated the sale proceeds, or some part of them, whilst concealing the misappropriation as an investment in MLP. If that is wrong, Mr Attwood's alternative case is that Mr Maidment made the investment in MLP recklessly, and in breach of the agreement that Annacott's business was to be residential property investment, primarily in East London.
The second petition was presented in respect of Tobian Properties Limited ("Tobian") on 16 November 2009. The petitioner is Mr Maidment and the individual respondents are Mr Attwood and Ms Nicola Heard, who is Mr Attwood's former partner and the mother of his child. Mr Maidment owns 25 per cent of the issued share capital of Tobian and Mr Attwood owns the remaining 75 per cent, less one share held by Ms Heard.
Tobian formerly carried on the business of an estate agency in East London, trading under the style of Oliver Jaques. Tobian entered into creditors' voluntary liquidation on 20 October 2008, and the liquidator has only deferred proceeding to dissolve Tobian because of this pending petition.
Tobian's former business is now carried on by a company called Epyc Limited, to which I shall refer as "Epyc". That is a company owned equally by Mr Attwood and Ms Heard. Ms Heard is now the sole director.
Mr Maidment's principal complaints in relation to Tobian are that Mr Attwood permitted Epyc to trade as Oliver Jaques between June 2005 and April 2008, whilst Tobian was also trading under that name or style, and without requiring any payment from Epyc for the use of the Oliver Jaques name.
Mr Maidment also complains that Mr Attwood caused Tobian to pay Mr Attwood excessive sums by way of remuneration. He further complains that when Tobian was known to be proceeding towards insolvent liquidation, Mr Attwood caused Tobian to transfer its business and its goodwill in the name Oliver Jaques to Epyc for nothing more than the £5,000 which was paid to the liquidator in order to fund her putting Tobian into liquidation.
Mr Maidment accepted, in the course of his evidence to the Court, that the Tobian petition was presented as a response to the Annacott petition present by Mr Attwood.
Chapter 2—The trial
Both petitions were directed to be heard together by an order of Registrar Derrett dated 19 January 2010. Since that date both petitions have proceeded in tandem.
In November 2010 the petitions were listed for hearing in July 2011 with an estimated length of hearing of seven days. It is now the twelfth day of that trial. The hearing was listed to start before me on Tuesday, 12 July, with the previous day being set aside for my pre-reading. Originally there had been ten trial bundles but a bundle of supplemental documents (bundle G) was added shortly before the trial began as a result of very late further disclosure by Mr Maidment during the course of the week before the trial began.
During the course of the trial further documents were disclosed, and were added to the trial bundles, as Mr Maidment continued to give further disclosure.
On the morning of what proved to be day 11, oral submissions had to be delayed by a little over an hour because Mr Maidment had produced still further documentation, together with a further witness statement (his sixth) dated 26 July 2011.
A further document (in the form of an email from Ms Pinar Ocal, a senior conveyancing solicitor with a law firm apparently in Turkey, summarising the results of an attached and incomplete company search against MLP, and timed at 2.36pm that afternoon) was provided only during the course of closing submissions from Mr Maidment's counsel, responding to the submissions of Mr Attwood's counsel.
Mr Maidment's counsel expressly accepted in closing that there had been what he referred to as "drip drip disclosure" on the part of Mr Maidment. I am satisfied that this has seriously impacted upon the integrity and the fairness of the trial process, although not ultimately the result.
In relation to Mr Maidment's sixth witness statement, and the late disclosure of documentation on day 11 of the trial, it was accepted that I should proceed on the footing that I should place such reliance upon them as I should think fit, bearing in mind that the witness statement and documentation had not been the subject of cross-examination. It was also agreed that Mr Attwood should be allowed to challenge the late documentation, and to impugn Mr Maidment's sixth witness statement, even though they had not been the subject of cross-examination. Mr Attwood's counsel expressly disclaimed any wish to seek an adjournment of the trial in view of the late further disclosure and evidence.
During the course of the trial, two further trial bundles have been produced. One (bundle H) contained documentation which had been filed at Companies House and which was, therefore, in the public domain. The other bundle (bundle I) contains the report of the single joint expert valuer, Mr Philip Costa of Strettons, which had only been produced by him on 11 July 2011.
By the time the trial began, on Tuesday 12 July, I had pre-read the skeleton argument of Mr Andrew Clutterbuck of counsel, who appears for Mr Attwood and Ms Heard. I had also read the written note of opening on behalf of Mr Maidment and his sister, prepared by Mr Thomas Grant and Mr James Sheehan of counsel. I had also read the documents in the reading lists identified by trial counsel.
The first day of the trial was taken up with various preliminary matters which I addressed in an extemporary interim judgment delivered on the afternoon of the first day of the trial.
The second day of the trial was taken up with opening speeches from Mr Clutterbuck and, more shortly, from Mr Grant. Mr Attwood...
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