Chandler v Wright
| Jurisdiction | England & Wales |
| Judge | Mr Justice Edwin Johnson |
| Judgment Date | 19 August 2022 |
| Neutral Citation | [2022] EWHC 2205 (Ch) |
| Docket Number | Appeal Reference: CH-2021-000278 |
| Court | Chancery Division |
[2022] EWHC 2205 (Ch)
Mr Justice Edwin Johnson
Appeal Reference: CH-2021-000278
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)
On appeal from the order of Deputy ICC Judge Schaffer dated 9th December 2021 (Case Nos. CR-2016-002220, CR-2016-002221 CR-2016-002222 and CR-2016-002224)
IN THE MATTER OF BHS GROUP LIMITED (IN LIQUIDATION)
AND IN THE MATTER OF SHB REALISATIONS LIMITED (IN LIQUIDATION)
AND IN THE MATTER OF DAVENBUSH LIMITED (IN LIQUIDATION)
AND IN THE MATTER OF LOWLAND HOMES LIMITED (IN LIQUIDATION)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
Daniel Lightman QC and Charlotte Beynon (instructed by Olephant Solicitors) for the Appellant
Joseph Curl QC and Ryan Perkins (instructed by Jones Day) for the Respondents
Hearing date: 17 th June 2022
APPROVED JUDGMENT
This judgment was handed down remotely by circulation to the parties' representatives by email and released to The National Archives. The time and date for hand-down are deemed to be 10.30am on 19 th August 2022
Introduction
This is my reserved judgment on the hearing of an application, made by Dominic Chandler, for permission to appeal against an order of Deputy ICC Judge Schaffer dated 9 th December 2021. By that order the Deputy ICC Judge ( “the Judge”) dismissed the application of Mr Chandler seeking to strike out certain parts of the Respondents' statements of case in these proceedings ( “the Strike Out Application”).
The Judge made his order of 9 th December 2021 ( “the Order”) pursuant to his judgment on the Strike Out Application, which he delivered at the case management conference in the proceedings, on 9 th December 2021 ( [2021] EWHC 3501; (Ch) [2022] BCC 457). In that judgment ( “the Judgment”) the Judge explained his reasons for refusing to strike out the relevant parts of the relevant statements of case.
Permission to appeal was refused by the Judge, for the reasons which he set out in a subsequent judgment at the case management conference. The renewed application for permission to appeal ( “the PTA Application”) came before me, in the usual way, on a paper application. I decided that the PTA Application would benefit from further submissions from both parties and, in the result, I made an order on 22 nd March 2022 of the kind which is sometimes referred to as a rolled-up order. My order provided for the PTA Application to be listed for a hearing, with the hearing of the appeal (subject to the question of permission) to follow.
At this hearing Mr Chandler has been represented by Daniel Lightman QC and Charlotte Beynon. The Respondents have been represented by Joseph Curl QC and Ryan Perkins. I am most grateful to all counsel for their helpful written and oral submissions. I have also had the advantage of a transcript of the hearing, which has been of immense benefit in reminding me of the detail of the submissions of counsel at the hearing.
As is often the case in hearings of this kind, I heard all the arguments relevant to both the PTA Application and (subject to the question of permission) the substantive appeal. It is convenient, in this judgment, to deal with all the arguments before coming to my decision on the PTA Application and, subject to that decision, to the question of what is to happen in relation to the substantive appeal. For ease of reference I will refer to the substantive appeal as “the Appeal”, but the use of this form of reference is of course subject to the question of permission.
The bundle of documents which was prepared for this hearing was substantial, running to well over 600 pages. I was also provided with a bundle of authorities, divided into four volumes, which ran to 41 items, and to which extensive reference was made in the course of the written and oral submissions. I mention this not by way of criticism, but rather to record that it has neither been possible nor necessary to make reference, in this judgment, to all of the material to which I was taken in the submissions. It has all been taken into account, whether or not the subject of express reference in this judgment.
The parties
It is convenient, in this judgment, to refer to Mr Chandler as “the Appellant”, and to refer to the respondents to the Appeal as “the Respondents”. It should however be noted, for the avoidance of confusion, that the parties have different capacities in the proceedings in which the Appeal has arisen ( “the Proceedings”). The Respondents are the parties who, as applicants, have commenced the Proceedings. The Appellant is the third of four individuals against whom, as respondents, the Proceedings have been commenced.
The Proceedings
The Proceedings arise out of the collapse of the BHS group of companies ( “the BHS Group”). The Respondents comprise the joint liquidators of four companies which were formerly part of the BHS Group, and the four companies themselves. I will refer to the four companies themselves as “the Companies”.
Prior to 11 th March 2015 the BHS Group was owned by a group of companies, referred to as the Taveta group of companies, associated with Sir Philip Green. On 11 th March 2015 the BHS Group was acquired by Retail Acquisitions Limited ( “RAL”). RAL was largely owned by Dominic Chappell, who is the first respondent to the Proceedings. Mr Chappell was also a director of RAL, together with the second respondent to the Proceedings, Lennart Henningson, and the fourth respondent to the Proceedings, Keith Smith.
The Companies all went into administration on 25 th April 2016. Thereafter the Companies went into liquidation as follows:
(1) BHS Group Limited ( “BHSGL”), the second applicant in the Proceedings and the holding company of the BHS Group, went into creditors' voluntary liquidation on 15 th January 2018.
(2) SHB Realisations Limited, formerly BHS Limited ( “BHSL”), was formerly the principal trading company of the BHS Group. BHSL is the third applicant in the Proceedings. BHSL went into creditors' voluntary liquidation on 2 nd December 2016.
(3) Davenbush Limited ( “Davenbush”), the fourth applicant in the Proceedings, went into creditors' voluntary liquidation on 15 th January 2018.
(4) Lowland Homes Limited ( “Lowland”), the fifth applicant in the Proceedings, went into creditors' voluntary liquidation on 16 th January 2018.
The respondents to the Proceedings were all directors of the Companies, with the exception of Keith Smith ( “Mr Smith”), who was a director of BHSGL. In the case of the Appellant his directorships were as follows:
| Company | Appointed | Resigned |
| BHSGL | 18 th March 2015 | 6 th July 2016 |
| BHSL | 20 th March 2015 | 6 th July 2016 |
| Davenbush | 17 th April 2015 | 6 th July 2016 |
| Lowland | 17 th April 2015 | 6 th July 2016 |
The Proceedings have been commenced by an Insolvency Act Application Notice dated 11 th December 2020. By the Proceedings the Respondents bring claims against the Appellant and the three other respondents to the Proceedings for relief pursuant to Sections 212 and 214 of the Insolvency Act 1986.
Given the potential for confusion between the Respondents, as I have defined them above (the respondents to the Appeal), and the four individuals who are the respondents to the Proceedings, I will refer collectively to the four individuals who are the respondents to the Proceedings (including the Appellant) as “the Defendants”.
So far as the claims for relief under Section 212 are concerned, the Respondents allege that the Defendants breached their duties as directors during the period of RAL's ownership of the BHS Group. The Respondents allege that the Defendants thereby brought about a deterioration in the financial position of the Companies, which would have been avoided if the alleged breaches had not occurred. A variety of relief is sought under Section 212, but the essential claim is that the Defendants be required to account to the Companies for the alleged deterioration in their financial position which the Defendants are alleged to have caused.
Turning to Section 214, the Respondents allege that the Defendants wrongfully allowed the Companies to continue to trade during the period of RAL's ownership of the BHS Group when they knew or should have concluded that there was no reasonable prospect that the Companies would avoid going into insolvent liquidation. The Respondents again allege that the Defendants thereby brought about a deterioration in the financial position of the Companies, which would have been avoided if the alleged wrongful trading had not occurred. Again, a variety of relief is sought under Section 214, but the essential claim is that the Defendants be required to account to the Companies for the alleged deterioration in their financial position which the Defendants are alleged to have caused.
The sums claimed in the Proceedings pursuant to Sections 212 and 214 are very substantial. The principal claim against the Defendants (with the exception of Mr Smith) is that they should be required to contribute the sum of £163,092,249 to the Companies. This figure is derived from the respective increases in the net financial deficiencies of the Companies which are said to have been caused by the Defendants' misfeasance. The actual alleged increases amount to a figure in excess of £163,092,249, but this figure of £163 million odd has been calculated as a capped...
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Broadly Pleaded Claims Based On Date Of Knowledge In Misfeasance And Wrongful Trading Claims Struck Out (Chandler v Wright)
...the relevant date of knowledge that insolvent liquidation was inevitable and trading should have ceased. Chandler v Wright and others [2022] EWHC 2205 (Ch) What are the practical implications of this This is a useful judgment offering guidance to office-holders bringing misfeasance claims u......