Anthony King v Kings Solutions Group Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Leech |
| Judgment Date | 11 May 2022 |
| Neutral Citation | [2022] EWHC 1099 (Ch) |
| Docket Number | CR-2018-002335 |
| Court | Chancery Division |
In the Matter of Kings Solutions Group Limited
And in the Matter of Section 994 of the Companies Act 2006
[2022] EWHC 1099 (Ch)
Mr Justice Leech
CR-2018-002335
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMPANIES COURT (ChD)
Ms Catherine Addy QC and Mr Joseph Sullivan (instructed by Macfarlanes LLP) appeared on behalf of the Respondents.
Mr Christopher Newman (instructed by Claremont Litigation Ltd) appeared on behalf of the Petitioners.
Hearing dates: 29, 30 and 31 March 2022
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
I. The Applications
By Application Notice dated 24 September 2021 the Second to Fifth Respondents apply for permission to amend the Points of Defence (the “ Amendment Application”) and by Application Notice dated 14 January 2022 (the “ Strike Out Application”) they also apply to strike out certain paragraphs in the Amended Points of Claim (the “ Points of Claim”) or, alternatively, for reverse summary judgment. They contend that the Court should strike out the contested allegations or grant reverse summary judgment because the pleaded issues have all been determined by the Court in Claim No. HC 2017 002379 (the “ Bribery Claim”).
By Application Notice dated 15 December 2021 the Petitioners seek an order that unless the Sixth Respondent files a Defence to the Points of Claim within 28 days of the application being heard, it should be debarred from defending the unfair prejudice petition (the “KSSL Application”). This is a discrete application and requires the Court to consider the appropriate procedure when the company which is the subject of a petition under section 994 of the Companies Act 2006 (or, in this case, its trading subsidiary) is joined as a respondent to the petition.
This is the second occasion on which I have considered whether to strike out parts of the Points of Claim. On 29 October 2020 I struck out a number of allegations but permitted a number of contested allegations to go to trial: see [2020] EWHC 2861 (Ch). The Second to Fifth Respondents successfully appealed against that decision and on 17 December 2021 the Court of Appeal struck out further contested allegations: see [2021] EWCA Civ 1943. Although those allegations are not the subject of the applications before me on this occasion, the Court of Appeal gave clear guidance about the way in which the Court should approach statements of case in an unfair prejudice petition both generally and in this particular case: see [63] to [67].
In the remainder of this judgment I will adopt the defined terms and abbreviations which Snowden LJ used in his judgment (as supplemented by the additional terms which I used in my first judgment and below). Snowden LJ referred to the Second to Fifth Respondents as the Appellants (as indeed they were). I will adopt the term the “ Applicants” to refer to them (as I did in my first judgment). I adopt this term because the KSSL Application requires me to decide whether KSSL has an active role in the Petition and should serve Points of Defence and, if it fails to do so, what the consequence should be. I prefer not to adopt terminology which might give the impression that I have pre-judged that issue.
It is necessary for the Court to rule on some of the amendments which form the basis for the Amendment Application whatever the outcome of the Strike Out Application. But the scope of the Amendment Application will be narrowed if the Court strikes out the paragraphs relating to the Bribery Claim. I therefore deal with the Strike Out Application before the Amendment Application even though the latter was issued first.
II. Background
As Snowden LJ remarked at the beginning of his judgment the Petition is only one piece of litigation in a long-running and procedurally complex dispute between the shareholders of the Company. The principal claims and their outcomes (so far as they have already been determined) are as follows:
(1) The Misrepresentation Claim: On 15 July 2015 the Petitioners issued proceedings under CPR Part 7 against Primekings, Mr. Fisher and Mr. Swain (the “ Misrepresentation Claim Defendants”) alleging that they had made fraudulent misrepresentations to the Petitioners about the unwillingness of the Company's bankers, GE, to continue to support the Company. In April 2017 the claim came on for trial but on 15 May 2017 the Petitioners announced to the court that they wished to discontinue the Misrepresentation Claim. Their counsel apologised unreservedly for the serious allegations which they had made and stated that they were unreservedly withdrawn. On 12 June 2017 Marcus Smith J made the Interim Costs Order for £1.7m.
(2) The Part 8 Claim: On 27 October 2017 the Misrepresentation Claim Defendants issued the Part 8 Claim for an order for sale of the Petitioners' shares in the Company (over which they had now obtained charging orders). Deputy Master Cousins refused to stay the sale and shortly before a hearing listed to determine the terms of the sale, the Petitioners paid the Interim Costs Order in full. On 17 December 2018 the Deputy Master gave a reserved judgment ordering the Petitioners to pay the costs of the Part 8 Claim on an indemnity basis.
(3) Detailed Costs Assessment: On 2 April 2019 the Misrepresentation Claim Defendants also applied for a detailed costs assessment which the Petitioners resisted. On 18 November 2020 final costs certificates were issued for a total of £2,726,154.87 in respect of the Misrepresentation Claim and £411,541.84 in respect of the Part 8 Claim.
(4) The Bribery Claim: On 15 August 2017 KSSL issued the Bribery Claim under CPR Part 7 against Anthony King and Mr Stephen Evans alleging that they had taken a bribe from TCH Leasing and committed breaches of fiduciary duty. In 2018 the claim against Mr Evans was settled. But Anthony King counterclaimed for the tort of abuse of process and on 1 December 2020 both the claim and counterclaim came on for trial before Mr Andrew Lenon QC (sitting as a judge of the High Court). On 18 February 2021 he gave judgment holding that Mr Anthony King had taken bribes and committed breaches of fiduciary duty and he awarded KSSL £45,666.47 in damages or equitable compensation. He also dismissed the counterclaim. On 27 July 2021 the Court of Appeal dismissed an application for permission to appeal after an oral hearing.
(5) The Conspiracy Claim: On 5 February 2020 the Petitioners issued the Conspiracy Claim under CPR Part 7 against Primekings, Mr. Stiefel, Mr. Fisher, Mr. Swain, solicitors and leading counsel who had been involved in the Misrepresentation Claim alleging that they had misled the Petitioners about the total costs incurred by the Misrepresentation Claim Defendants; that they had misled Marcus Smith J into making the Interim Costs Order; and that they had submitted a fraudulently inflated bill of costs for the Misrepresentation Claim. On 26 April 2021 Cockerill J struck the entire claim out: see [2021] EWHC 1045 (Comm). On 26 July 2021 Males LJ dismissed an application for permission to appeal on paper.
(6) The Professional Negligence Claim: On 6 December 2019 the Petitioners issued the Professional Negligence Claim under CPR Part 7 against their solicitors and counsel in the Misrepresentation Claim alleging that negligently and in breach of fiduciary duty they threw away an overwhelmingly strong case. Insurers for their solicitors funded the payment of the Interim Costs Order but the claim itself has yet to be determined.
I deal with the Bribery Claim immediately (below). However, I will not set out the wider factual and procedural background to the Petition or any of the related claims. I set out the necessary background in my first judgment: see [2020] EWHC 2861 (Ch) at [5] to [79]. At that stage, no final costs certificates had been issued and the judgments in the Bribery Claim and the Conspiracy Claim had not been handed down. However, my original judgment is now supplemented by the introduction to the Court of Appeal's decision: see [1] to [33]. Cockerill J also set out the background to the dispute in some detail: see [2021] EWHC 1045 (Comm) at [58] to [145]. There is little benefit in either cutting or pasting this material into this judgment or attempting yet another synthesis of the facts or the litigation.
III. The Bribery Claim: Findings
A. The Principal Judgment
On 20 December 2013 the parties entered into the SPA, the Subscription Agreement and the Rescue Package Agreements which formed the basis of the Transaction and which the Petitioners attempted to set aside in the Misrepresentation Claim. After the Transaction had been completed, Anthony King remained the Chief Executive Officer (“ CEO”) and a director of KSSL.
(1) The Claim
In April 2015 KSSL entered into an arrangement to which the judge referred as the “ Range Rover Transaction” under which TCH Leasing agreed to provide Anthony King with a Range Rover for 36 months and Mr King agreed to pay a rental of £100 per month. Mr Evans was responsible for agreeing the terms of the Range Rover Transaction with TCH Leasing and the judge made the following findings about the transaction at [81] and [82]:
“81. The Range Rover Transaction resulting from the exchanges set out above was, in summary, a tripartite arrangement on the following terms: (1) TCH agreed to provide Mr King with the Range Rover for 36 months; (2) KSSL agreed that TCH could retain KSSL's profit share and that TCH...
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