Carmela De Sena v Joseph Notaro
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 01 May 2020 |
| Neutral Citation | [2020] EWHC 1031 (Ch) |
| Docket Number | Case No: D30BS912 |
| Court | Chancery Division |
[2020] EWHC 1031 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: D30BS912
John Blackmore (instructed by Tozers LLP) for the Claimants
Dov Ohrenstein (instructed by Ashfords LLP) for the First and Second Defendants
Clare Dixon and Hannah Daly (instructed by Kennedys Law LLP) for the Third Defendant
Imran Benson (instructed by DAC Beachcroft LLP) for the Fourth Defendant
Hearing dates: 5–7, 11–13, 18–21, 25–28 November 2019
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.
Introduction
This is my judgment on the trial of a claim brought by the claimants against the defendants in relation to a corporate demerger which took place in relation to a family company, S Notaro Holdings Ltd (“Holdings” or “the company”), on 28 April 2011. The first claimant and the first defendant are siblings. Until the demerger they were both shareholders in and directors of Holdings. The first claimant held 31.25%, and the first defendant 43.75% of the shares in Holdings. The remaining 25% were held by two other siblings, Antonietta (“Netta”) Notaro and Letitzia (“Tico” or “Lee”) Saban, each with 12.5%. The effect of the demerger was that the first claimant gave up her shares in Holdings, and assets of Holdings or its subsidiaries were transferred to the second claimant, a company formed for the purpose, owned and controlled by the first claimant.
In broad terms, the claim against the first and second defendants is that the demerger, and therefore the acquisition of the first claimant's shares in Holdings was procured by undue influence of the first defendant, who also acted in breach of fiduciary duty towards her, and that the second defendant has been unjustly enriched at the expense of the first or alternatively the second claimant. The claims against the third defendant (a firm of accountants) and the fourth defendant (a firm of solicitors) are that, in relation to the demerger they acted in breach of contract (fourth defendant only), breach of fiduciary duties and of a duty of care owed to the first claimant, and in breach of a duty of care owed to the second claimant.
In summary, the first defendant denies undue influence and breach of fiduciary duty, and the second defendant denies any unjust enrichment of either claimant. The third and fourth defendants deny that they owed any relevant duties to the claimants, having been retained to act for Holdings in the demerger, and not for the first claimant. I will come back to the claims in more detail later.
The background to this matter is as follows. The shareholders' parents, Sabato and Immacolata Notaro, were Italian immigrants who settled near Bridgwater in the early 1950s. They had 10 children. The first claimant was the eldest, born in 1946. Then, in order of age, came Carolina (“Lena”), Rosa, the first defendant, Philip, Nunzio, Netta, Julie, Tina, and Tico. So there were seven girls and three boys. Sabato established a successful building and development business, incorporated in 1965 as S Notaro Ltd (“Ltd”). Nine of his ten children, including the first claimant and the first defendant, followed him into the business, although some later left. The first claimant became a shareholder in Ltd in 1968. She worked with her father for many years until he retired in 1988, when the first defendant became managing director, and she worked with him. Sabato died in 1993.
In 1999 Holdings was incorporated as the holding company of a group of companies, namely Ltd, and S Notaro Windows Ltd (“Windows”). Further companies were incorporated and added to the group later, namely S Notaro Developments Ltd (“Developments”) (in 2007), and S Notaro Hotels Ltd (“Hotels”) (in 2002). A further company S Notaro Land Ltd (“Land”) was also incorporated (in 2004), but was held outside the group, although by the same shareholders and in the same proportions. As I understand it, that remains the case today. This litigation is not therefore concerned as such with Land, although it features briefly in the story. The second defendant was incorporated as part of the demerger process.
Witnesses
The following witnesses were tendered for cross-examination: the first claimant, her husband Salvatore De Sena, and her son Antonio de Sena, the first defendant, a former employee of the group Prudence Morgan, David Savill and Andrew Browne of the third defendant, Thomas Brennan of the fourth defendant, and the expert witnesses Neil Gladwin and Martyn Jones (dealing with property valuation), and Geoffrey Mesher and David Butterworth (dealing with share valuation).
There were also before me expert reports from Mr Mesher and Mr Sat Plaha in relation to accountants' liability issues. Because of time constraints, and also in the light of reservations which I expressed at an earlier stage in the trial concerning the admissibility of these reports, at least in their entirety, I was invited merely to read and take into account the reports, rather than having their makers tendered for cross-examination.
I give here my impressions of all the witnesses tendered for cross-examination.
The first claimant was a quiet and often reticent witness, though occasionally emotional in relation to certain matters. She is obviously a very private person. Many of her private feelings were recorded in a diary kept contemporaneously. Although she was born in Italy, she came to this country when she was very young, and therefore speaks English perfectly, with a Bridgwater accent. Notwithstanding this litigation, and the earlier litigation between siblings, she was very polite throughout, and displayed huge loyalty to her family and especially to her parents. She is seven years older than the first defendant and used to look after him when they were younger. It was evident to me that she still found it difficult to criticise him publicly.
Although she was clearly highly competent for the administrative role in the group which she took on over many years, including acting as company secretary as well as a director, her approach to the questions she was asked was often rather literal, and she did not always follow complex questions very easily. She sought recognition and respect for her position, and displayed a certain insecurity in some aspects of her evidence. It was clear that she did not like to stand out, feel isolated or be seen as the instigator of difficulties. She accepted that she could be oversensitive. Nonetheless, she gave her evidence in a transparent and straightforward way, and I have no doubt that she was telling me the truth as she believed it to be. But I do think that in certain respects she has convinced herself that she was in the right, and this has influenced her evidence. As will be seen, I do not accept important parts of it, especially parts which seek to draw inferences from primary fact.
Her husband, Salvatore De Sena, came to England in his late teens, and Italian is clearly his first language. But his English was completely fluent and I do not think he had any difficulty in expressing his ideas in response to the questions put to him. He was understandably protective of his wife, and displayed a certain animosity towards the first defendant. Nevertheless, he was a straightforward witness and I have no doubt that he was trying to assist the court. However, he was not much involved in the critical events with which I am concerned, and therefore his evidence in most aspects is rather marginal.
Their son, Antonio de Sena, who worked in the part of the business concerned with windows, was supportive of his mother, but gave his evidence in a straightforward and transparent way. I have no doubt that he was telling me the truth in what he said.
Prudence Morgan was a very quick-witted, but precise and exact witness. She had been a legal secretary in a previous career, and it showed. She had obviously been a very efficient employee at the group. She gave her evidence in a transparent and honest way, but also with a touch of humour. I accept her evidence without any reservation.
The first defendant was a softly spoken witness who thought quickly and gave careful answers. Like his sister, he too had a Bridgwater accent. At the beginning of his evidence he asked for a lot of questions to be repeated because of his hearing difficulty. I noted that this appeared to wear off as his evidence went on. He gave the impression of being a shrewd negotiator and a businessman who was prepared to take risks in order to achieve a better result. When he was being cross-examined on some difficult issues, I noted that his body language sometimes became more aggressive, even though his answers were still softly spoken. Overall, I formed the view that his somewhat subdued evidence in court was probably not how he behaved in his day-today business. I think that, at least most of the time, he was telling me the truth as he saw it, though in certain respects I think he has persuaded himself that he was in the right, and that therefore the facts must support him. I have no doubt he could be tough when he thought it in his interests to be so. I treat his evidence with some caution.
David Savill was a clear, transparent and obviously honest witness. I accept his evidence without reservation.
Andrew Browne was a knowledgeable and evidently experienced accountant, but not necessarily very...
To continue reading
Request your trial
-
KSH Farm Ltd v KSH Plant Ltd
...either antecedently to the events of 9 and 10 October 2017 or subsequent to those dates. As HHJ Matthews said in De Sena v. Notaro [2020] EWHC 1031 Ch at [27]: “… a court must give reasons for its decisions. That is what I am doing now. But judges are not obliged to deal in their judgments......
-
Markus Pedriks v Serge Grimaux
...was insufficient; “… high expectations do not necessarily lead to equitable remedies”. 132 In DeSena & Ors v Joseph Notaro & Ors [2020] EWHC 1031 (Ch) (“ DeSena”), HHJ Paul Matthews (sitting as a Judge of the High Court) rejected a claim that a director and shareholder owed fiduciary dutie......
-
HRH Princess Deema Bint Sultan Bin Abdulaziz AL Saud v Ronald William Gibbs
...and generally accord with what His Honour Judge Paul Matthews sitting as a judge of the High Court in De Sena v Joseph Nataro and others [2020] EWHC 1031 Chancery said at paragraphs 23 to 32. I especially emphasise, as I mentioned at the start of trial, that notwithstanding thousands of pag......
-
Singleton Birch Ltd and Another
...to me to fall within that vivid phrase, “empty rhetoric” and are of no value. [21] The Appellants referred me to De Sena v Notaro [2020] EWHC 1031 (Ch) as a recent example of the High Court applying the principles established in case law based on the rule in CPR Part 35.1. In De Sena a shar......