Bdw Trading Ltd v Michael Neill Fitzpatrick and Another
| Jurisdiction | England & Wales |
| Judge | Judge Behrens |
| Judgment Date | 03 December 2015 |
| Neutral Citation | [2015] EWHC 3490 (Ch) |
| Docket Number | Case No: HC-2015-004356 |
| Court | Chancery Division |
| Date | 03 December 2015 |
[2015] EWHC 3490 (Ch)
His Honour Judge Behrens sitting as a Judge of the High Court
Case No: HC-2015-004356
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
7 Rolls Building
New Fetter Lane
London EC4A 1NL
Daniel Toledano QC and Nehali Shah (instructed by Slaughter & May) for the Applicant
Charles Béar QC and Simon Paul (instructed by Stokoe Partnership) for the Respondents
Hearing date: 19 November 2015
Introduction
This is an application by the Applicant ("BDW") to continue a freezing injunction made by Newey J on 19 October 2015. In addition to the freezing order BDW seeks disclosure orders in order to ascertain the extent of Mr Fitzpatrick's alleged wrongdoing. It also seeks to interrogate Mr Fitzpatrick in order to enable it to trace the proceeds of the alleged wrongdoing.
The application was argued on 19 November 2015 for a full day by leading Counsel on both sides. During the course of the hearing I decided to continue the freezing order against the Respondents. However I reserved judgment on all other matters. In addition to the matters already mentioned there were arguments as to the extent to which TCS should be entitled to dispose of assets "in the ordinary course of business" and as to the extent to which BDW should be entitled to use the information supplied by Mr Fitzpatrick under the compulsion of the court orders.
Before dealing with the reserved matters I must acknowledge with thanks the considerable assistance I have had from the full and clear written submissions and oral argument on the points that have been argued which have been of the highest quality. In this judgment I shall refer only to Mr Toledano QC and Mr Béar QC by name. This is for convenience only and is not intended as a discourtesy to either Ms Shah or Mr Paul each of whom has, I am sure, contributed to the submissions that have been made on behalf of their respective clients.
This is the judgment on those reserved matters.
The underlying facts
BDW is the principal operating company in the Barratt Group of companies, which operates a national business involved in the purchase and development of land and the construction and sale of homes. It is the largest house builder in the UK. Mr Fitzpatrick has been employed by BDW since 2003. He is currently employed as a Procurement Manager in the Stratford division of the Barratt Group.
Top Construction Services Limited ("TCS") is a company, incorporated on 24 September 2008, of which Mr Fitzpatrick is and has at all material times been the sole director and shareholder.
BDW alleges that Mr Fitzpatrick and TCS have received and/or participated in the procurement of the payment of secret profits, bribes or commissions from sub-contractors or potential sub-contractors of BDW (or connected parties) for favours (namely assistance with the procurement and/or maintenance of business with BDW), and in misappropriating and misusing BDW's confidential information.
The extent of the alleged secret profits is unknown but the evidence currently available suggests that it is substantial. In paragraphs 27 and 28 of his witness statement Mr Dobie identified sums totalling approximately £1 million being paid into the Respondents' bank accounts in the period between September 2013 and August 2015 from companies that provide construction materials and related services to Barratt London.
On 19 October 2015 an application was made to Newey J without notice to the Respondents for a freezing order and other relief. The application was supported by a detailed affidavit from Mr Dobie which extended to 47 pages and numerous exhibits.
It is not necessary to go into details but a summary of the overview is contained in paragraph 13:
As I will describe in further detail below, I have identified information which appears to show that:
i. In recent years, Mr Fitzpatrick's spending is well beyond what could reasonably be supported by his salary from the Applicant. He has purchased assets, including expensive cars and a house, worth a significant sum of money. He has also provided significant sums of money — on the basis of what is presently known, in excess of £450,000 — to his parents and to his wife.
ii. Much of this money appears to have passed through TCS. However, the business activities of that company are not clear, it has no public profile, and it is not clear how it could generate significant turnover and profits when Mr Fitzpatrick (as its sole director) is working full time for the Applicant.
iii. Some of the funds received by TCS were paid to it by a company, M Price Limited (" M Price"), which has tendered for and been awarded substantial contracts by the Applicant. Mr Fitzpatrick appears to have been involved in the tendering processes in which that company participated. So far as I am aware, Mr Fitzpatrick has not disclosed to the Applicant the existence of TCS or the fact that he has, through TCS, established a financial relationship with some of the Applicant's subcontractors. It also appears that Mr Fitzpatrick (directly or through TCS) may have sourced further significant sums (several hundreds of thousands of pounds) from subcontractors in order to finance the purchase and renovation of his home.
iv. Mr Fitzpatrick appears to be taking inappropriate steps to assist certain subcontractors to obtain contracts and maintain business with the Applicant, including by providing or offering to provide them with competing bids from other tenderers. Much of this activity appears to take place using a personal email account, fitzie69@hotmail. com (The " Hotmail Account"). The only reason that the Applicant has become aware of the Hotmail Account is because Mr Fitzpatrick forwards emails from that account to his work email account from time to time.
Newey J duly made a freezing injunction against the Respondents. It is not necessary to comment on the terms of the freezing order save to note:
1. that under paragraph 15(2) there was the exception which permitted TCS to dispose of its assets in the ordinary course of business in slightly modified form:
This order does not prevent TCS from dealing with or disposing of any of their assets in the ordinary and proper course of business, but before doing so TCS must tell [BDW]'s legal representatives.
2. that BDW undertook (in Undertaking 8):
[BDW] will not without the permission of the court use any information obtained as a result of this order for the purpose of any civil or criminal proceedings against the Respondents … other than this claim.
Newey J also made a number of other orders which included:
1. An order in standard form requiring the Respondents to provide details of all their assets exceeding £1,000.
2. An order (under paragraph 9(2)) requiring the Respondents to provide an affidavit setting out:
"The nature, extent, value, what has become of and who now holds all and any assets, including profits from assets, which are derived from all or any monies received by either of the Respondents during the course of the First Respondent's employment with the Claimant from (a) sub-contractors or tenderers for business of or providers of goods and services to the Applicant (the " Subcontractors") or (b) officers or employees or companies connected with the Subcontractors (the " Connected Entities"). The Subcontractors and the Connected Entities include [a non-exhaustive list then follows]"
3. An order (under paragraph 10) requiring the Respondents to provide copies of bank statements for the 12 month period prior to the date of the order.
Peter Smith J approved a consent order dated 29 October 2015 in which a number of variations to the order were agreed:
1. BDW consented to extend the time for compliance with paragraph 9(2) until 5 days after the Return Date hearing.
2. BDW also consented to restrictions on the use of any information disclosed pursuant to the Newey Order such that BDW would not (prior to the Return Date) (i) share any such information outside a "Confidentiality Club" (consisting of Barratt Development PLC's (" BD PLC's") Board, BD PLC's Group General Counsel, BD PLC's Chief Internal Auditor ("Mr Dobie"), and BDW's solicitors/counsel; (ii) share any information with any officer, employee or manager of Barratt; and (iii) use any information in any disciplinary proceedings/investigation against Mr Fitzpatrick.
On 27 October 2015 Mr Fitzpatrick filed an affidavit in compliance with paragraphs 9(1) and 10 of Newey J's order. In paragraphs 4 to 14 he disclosed his assets as:
1. an interest in a property jointly owned with his wife with an equity of approximately £500,000;
2. an interest in 3 prestige cars with a combined equity estimated at £130,000;
3. a bank account with a balance of approximately £25,000. A joint account with his wife with a balance of approximately £3,500; and
4. Jewellery and a watch valued at approximately £6,000.
It is not necessary to refer to the details of his personal circumstances which are contained in the affidavit.
In paragraphs 16 – 19 of the affidavit Mr Fitzpatrick set out TCS's assets. The assets consisted of two bank accounts with balances totalling approximately £70,000. The only debtors were Mr Fitzpatrick's parents in respect of a loan of £325,500 which was not repayable until after the death of the survivor of them. The only liabilities disclosed were a liability for VAT in the sum of £12,000 and an unspecified sum in relation to corporation tax.
On the same day the Respondents...
To continue reading
Request your trial
-
The Public Institution for Social Security v Fahad Maziad Rajaan Al Rajaan & Others
...Questions of proportionality will always arise, as is clear from the case-law which was summarised in BDW Trading Ltd. v Fitzpatrick [2015] EWHC 3490 (Ch), paragraphs [49] – [55]. In Arab Monetary Fund v Hashim (No.5) [1992] 2 All ER 911, Hoffmann J. said that the plaintiff must demonstra......
-
Lone Star R E. Management Company II, Ltd v Hugh J. Ward. III
...is consistent with the approach taken by the English courts under the CPR. Thus, in BDW Trading Limited v Fitzpatrick and others [2015] EWHC 3490 (Ch) Judge Behrens held at [24]: “ When the application was before Newey J no proceedings had been issued thus the application for disclosure wa......
-
Lone Star RE Management Company II Ltd and Ors v Ward
...Ltd v Ivanishvili and ors [2020] Bda LR 62 Athene Holdings Ltd v Siddiqui and ors [2021] Bda LR 58 BDW Trading Ltd v Fitzpatrick and ors [2015] EWHC 3490 Millar v Harper (1888) 38 Ch D 110 Luen Tat Band Manufacturer Ltd v Stephen Liu Yiu Keun [2020] HKCFI 2610 Speyside Estate and Trust Co L......
-
Yaron Brown And Others v Lexinta Ltd And Others
...location or preservation of assets to the claim. The order sought is specific.” (3) In BDW Trading Limited v Michael Neil Fitzpatrick [2015]EWHC 3490 (Ch), Behrens J went through the jurisdictional basis for a banker’s trust order and made the following (i) A claimant must demonstrate a rea......