Autogas (Europe) Ltd ((in Liquidation)) v Thomas Tadeus Ochocki
| Jurisdiction | England & Wales |
| Judge | H.H. Judge Keyser |
| Judgment Date | 07 September 2018 |
| Neutral Citation | [2018] EWHC 2345 (Ch) |
| Court | Chancery Division |
| Date | 07 September 2018 |
| Docket Number | Case No: HC-2015-001029 |
[2018] EWHC 2345 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice
The Rolls Building,
7 Rolls Buildings,
Fetter Lane,
London, EC4A 1NL
H.H. Judge Keyser Q.C.
sitting as a Judge of the High Court
Case No: HC-2015-001029
James Pickering (instructed by Devonshires Solicitors LLP) for the Claimant
The First Defendant on his own behalf
Ian Bridge (instructed under direct access) and Hartley Foster (of Fieldfisher LLP) for the Second and Third Defendants
Hearing dates: 13, 14, 15, 16, 20, 21, 22, 23 March 2018 and 8 June 2018
Written Submissions: 9 and 25 May 2018
Judgment Approved
H.H. Judge Keyser Q.C.:
Introduction
This is a claim for compensation for dishonest assistance in a fraud.
The claimant (“Autogas”) is a limited company incorporated in England. On 11 August 2010 a winding-up order was made against Autogas upon the petition of HMRC. HMRC had already obtained the appointment of a provisional liquidator, Mr Stephen Hunt (who is now the liquidator), and he had commenced proceedings in the Chancery Division (“the Earlier Proceedings”) in Autogas's name claiming damages against a number of defendants for various breaches of duty said to amount to fraud in connection with the matters leading to its insolvency.
The alleged fraud was quite simple. It was committed in the context of chains of sales of German electricity between March and June 2010. In each case the chain was the same. Total Global Steel Limited (“TGS”), acting by a German subsidiary, sold the electricity to HCX Rotterdam BV (“HCX”), a company incorporated in the Netherlands. HCX sold the electricity to Autogas. Autogas sold it to OCH Capital LLP (“OCH”), a limited liability partnership in England. OCH sold it to Gazprom Marketing and Trading Limited (“Gazprom”). Importantly, no VAT was payable on the sales by HCX to Autogas, because HCX was a VAT-registered trader in the EU, but VAT was payable on the sales by Autogas to OCH. The way the fraud operated was summarised as follows by the liquidator in one of his witness statements in the earlier proceedings, which is also how the matter has been explained in the present proceedings (here and in other citations I substitute my abbreviations for those used at various times by others):
“This case involves a relatively simple defaulting trade fraud. Autogas, an effectively dormant company, but holding an existing VAT number, suddenly commenced trading in electricity, buying German electricity from HCX Rotterdam … in Holland (on which transactions no VAT was payable) and then selling it on to OCH (on which transactions VAT was payable). The way the fraud operated was that instead of OCH making payment to Autogas and Autogas then paying HCX, other than for the first two payments which went to Autogas, all of the payments due from OCH to Autogas (including the VAT element of the invoices in Autogas's profit element) were instead paid by OCH direct to HCX in Holland. No payments were ever returned by HCX to Autogas, although it is true that €1 million was sent on Autogas's instructions to Hong Kong. The net result of this was that all of Autogas assets were paid offshore to HCX such that Autogas was unable to discharge its creditors (primarily HM Revenue and Customs).”
I observe that in respect of most of the trades OCH made payment in money, but sometimes it paid by offsetting transactions involving carbon credits. I say a little more about those transactions later, but at this stage it suffices to observe that they functioned mainly as a method of payment for the electricity.
There were several defendants to the claim in the Earlier Proceedings: Mr Marc Henri De Bondt, Dr Mehdi Amraie and Mr Marc De Keersmaeker as de iure or de facto directors of Autogas; HCX; Mr Marcus van Mierlo as the person in control of HCX; and Jade Capital Trading Limited (“Jade Capital”), a company registered in Hong Kong, which had been acquired by new owners in March 2010 and to which HCX transferred €1,000,000. The claim against Dr Amraie was compromised at an early stage; he was released from any liability in exchange for providing documents and information to the liquidator. Judgment in default was entered against Jade Capital and in due course £435,783 was recovered under the judgment. The case against Mr De Bondt, Mr De Keersmaeker, Mr van Mierlo and HCX proceeded to trial before His Honour Judge Mackie Q.C. on 22 February 2012. None of the defendants appeared or was represented at the trial. Judge Mackie received written and oral evidence and found the case against the defendants proved and gave judgment: against HCX, for €4,511,275.30, being the amount of the overpayment to it, plus interest; against Mr De Bondt and Mr De Keersmaeker, for €593,668.85 in respect of the moneys paid to Jade Capital, plus interest; and against Mr De Bondt, Mr De Keersmaeker, Mr van Mierlo and HCX for an amount to be assessed in respect of the remainder of the claim. So far as I know, Autogas has not pursued the assessment of further compensation. No moneys have been recovered, other than those obtained from Jade Capital.
Because the case advanced by Autogas regarding the nature of the primary fraud is materially identical in these proceedings to the case advanced in the Earlier Proceedings, it is convenient to refer to some passages from Judge Mackie's judgment. At paragraph 21 he quoted, as a useful summary, the liquidator's description of the fraud in the passage set out above. At paragraph 29 he referred to schedules produced by the liquidator to show the uncommercial nature of HCX's and Autogas's trading (those schedules or ones substantially the same have been put in evidence before me) and said:
“These summaries are revealing. The summary schedule of the calculated mark-ups and losses on the power trades show how HCX and Autogas were put in as buffers for electricity transactions between TGS and OCH in a way which leads to the irresistible conclusion that the only way that HCX could afford, and the only reason why Mr van Mierlo was content to allow things, to operate in this way was because HCX was receiving Autogas's assets including Autogas's trading profit.”
He continued at paragraph 33:
“The accumulation of all the evidence leads Autogas to submit that the business dealings between Autogas and HCX were fraudulent; that Mr De Bondt, Mr Keersmaeker, HCX and Mr van Mierlo conspired with each other to injure Autogas by causing or allowing Autogas's assets to be transferred to HCX. It seems to me that this is abundantly clear. This is a typical and not particularly sophisticated fraud whereby the claimant's assets are disposed of to the benefit and profit of others thereby defrauding the company and its creditors. It is said that such conduct was a breach of the duties of Mr De Bondt and Mr Keersmaeker. It obviously was because both directors and employees owe duties to their companies not to defraud them or make off or dispose unlawfully with their assets. It is claimed that HCX and Mr van Mierlo dishonestly assisted and were accessories to those breaches. It seems to me very clear that they were.”
Judge Mackie's findings in respect of the primary fraud in the Earlier Proceedings, as set out above, do not bind the defendants in the present proceedings and their correctness has not formally been admitted. However, no attempt has been made to show or argue that they are wrong or that there is a real possibility that they are wrong. On the basis of the evidence before me I can say shortly that Judge Mackie's findings are, in my view, amply supported by the evidence and are plainly correct. The trade between HCX and Autogas had no true commercial purpose but was simply designed to use Autogas as nothing more than a vehicle to create a VAT liability, with a view to the dishonest misappropriation of the VAT due on the sales to OCH.
In the present case, which was commenced in March 2015, Autogas seeks damages against three individuals who were involved in OCH at the time when it traded with Autogas, on the ground that they dishonestly assisted in the fraud. (The pleaded case is also put on the basis of conspiracy. However, Mr Pickering for the claimant accepted that this alternative basis could not succeed if the case in dishonest assistance did not, and he did not advance submissions specifically in respect of the alternative basis. Accordingly, I shall say no more about a case based on conspiracy as such. However, as I shall explain later, the case in dishonest assistance was ultimately put in a way that imputed collusion by the defendants with the primary fraudsters.)
OCH was established as a limited liability partnership in England on 3 March 2009. The designated members were the first defendant, Mr Thomas Ochocki, the second defendant, Mr Timothy Saunders, and OCH Capital and Partners LLP. Mr Ochocki was and is a stockbroker in the City. In that capacity he had for some years provided services to Mr Saunders, who was and is a successful businessman with a number of businesses, mainly focussing on engineering. When in 2008 the firm for which Mr Ochocki was working failed as a result of the financial crash, Mr Saunders put up the finance for a new stockbroking business, OCH. The profits of the business would be shared as to 80% for Mr Saunders and as to 20% for Mr Ochocki. Mr Saunders would have no direct involvement in the business but would exercise overall authority. Mr Ochocki would lead the broking team. The third defendant, Mrs Christina Craig, is Mr Saunders' daughter. At the time with which these proceedings are concerned she was unmarried and was known as Tina Saunders; nevertheless, I shall...
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To What Extent Can A Claim For Dishonest Assistance Be Made Against Banks When Receiving Fraudulent Bank Payments?
...such dishonesty is not easy. Similar to claims in conspiracy, the recent decision in Autogas (Europe) Ltd v. Ochocki and Others [2018] EWHC 2345 (Ch) shows the very high bar to prove such a claim. Nevertheless, it is unlikely that this would prevent claims of this nature being brought. In t......
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To what extent can a claim for dishonest assistance be made against banks when receiving fraudulent bank payments?
...such dishonesty is not easy. Similar to claims in conspiracy, the recent decision in Autogas (Europe) Ltd v. Ochocki and Others [2018] EWHC 2345 (Ch) shows the very high bar to prove such a claim. Nevertheless, it is unlikely that this would prevent claims of this nature being brought. In t......