David Victor Garofalo v David Adrian Crisp
| Jurisdiction | England & Wales |
| Judge | Caroline Shea |
| Judgment Date | 20 October 2023 |
| Neutral Citation | [2023] EWHC 2625 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No. CR-2023-005663 |
[2023] EWHC 2625 (Ch)
Caroline Shea KC
sitting as a Deputy Judge of the Chancery Division
Claim No. CR-2023-005663
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST
COMPANIES COURT (ChD)
IN THE INTENDED MATTER OF VALOREM HOLDINGS LIMITED
AND IN THE INTENDED MATTER OF VALOREM CAPITAL ONE LIMITED
AND IN THE INTENDED MATTER OF VALOREM DISTRIBUTION LIMITED
AND IN THE INTENDED MATTER OF VALOREM BESPOKE LIMITED
AND IN THE INTENDED MATTER OF CP PARFUMS LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006
James Bailey KC and Jessica Brooke (instructed by Olephant Solicitors) for the Intended Petitioner/Applicant
The Intended Respondents did not appear and were not represented
Hearing dates: 6 October 2023 and 9 October 2023
Introduction
The Petitioner in the intended petition has brought an application (“the Application”) for interim relief against the First Respondent, who is a Respondent in the intended petition, and the Second Respondent, who is the wife of the First Respondent, but who is not a Respondent in the intended petition.
The Application is made ex parte, and the hearing of the Application was conducted in private. It was submitted, and I accept for reasons which will become obvious, that it was necessary to hear the application in private for the proper administration of justice in the light of CPR r39.2(3). Publicity prior to the service of any order would defeat the object of the order, which is to secure the administration, and to safeguard the books and records, of the group of companies to which the intended petition relates.
The Application was heard in private on 6 October 2023. The hearing was adjourned to 9 October 2023, to allow the Petitioner to provide further evidence as to the means of the Petitioner to fulfil his cross undertaking in damages, and to allow me time to consider my judgment. At the adjourned hearing, upon having read further evidence submitted in the interim, and upon hearing Mr Bailey KC, Counsel for the Petitioner, on the question of the Petitioner's means and the terms of the interim relief sought, I made the orders sought, subject to some minor alterations in the detail.
Upon approval of the Order, I issued a summary Note of Reasons outlining the basis on which I had reached my determination, since time did not permit a full judgment to be finalised prior to the point at which it was necessary for the Order to be made, and I considered it important as matter of procedural fairness and natural justice for the First and Second Respondents to be furnished with a summary of the reasons for making the Order, as well as the terms of the Order itself. In the event of any inconsistency or conflict between the Note of Reasons and this judgment, this judgment is to prevail.
I fixed a Return Date of 23 October 2023, some fourteen days after the hearing of the Application.
The English Companies
The five respondent companies to the intended petition (“the English Companies”) are members of a group of six related companies (“the Group”), the central business of which involves the manufacture, distribution and sale of luxury perfumes throughout the world (“the Business”). The English Companies are:
(1) Valorem Holdings Limited (“VHL”). VHL is a holding company, of which the remaining English Companies, together with a sixth, Dutch incorporated company called Valorem Europe B.V., are either directly or indirectly wholly owned subsidiaries
(2) Valorem Capital One Limited (“VC1”), the primary trading entity of the Business
(3) Valorem Distribution Limited (“VDL”)
(4) Valorem Bespoke Limited (“VBL”)
(5) CP Parfums Limited (“CPL”).
Both the Petitioner and the First Respondent are directors of VHL and VC1. The First Respondent is the sole director of VDL and VBL. The directors of CPL are the First Respondent and VC1.
Final relief
By the intended petition, pursuant to ss. 994 and 996 of the Companies Act 2006 (“the 2006 Act”) the Petitioner seeks wide ranging relief, based on alleged actions on the part of the First Respondent which the Petitioner claims have caused unfair prejudice to the English Companies. The relief sought includes (and to summarise) orders requiring or permitting:
(1) the delivery up by the First Respondent of the English Companies' books and records;
(2) the Petitioner to purchase the First Respondent's shares in Valorem Holdings Limited (“VHL”);
(3) the removal/resignation of the First Respondent as director of the English Companies;
(4) the appointment of Dominic Fisher and Stephen Diederich as directors of VHL and VC1;
(5) the appointment of the Petitioner, Mr Fisher and Mr Diederich as directors of VBL, VPL and CPL;
(6) all necessary accounts and enquiries, with consequential orders for payments.
The Application
By the Application, the Petitioner seeks orders pursuant to s.37 of the Senior Courts Act 1981; s.7 of the Civil Procedure Act 1997; CPR 25.1(1)(a), (c)(i), (c)(ii), (h), (i) and (j); and CPR 31.17 as follows (in summary)
(1) an Imaging Order against the First and Second Respondents
(2) injunctive relief against the First and Second Respondents,
(3) disclosure Orders against the First and Second Respondents
(4) a Passport Order against the First Respondent;
(5) prohibitory orders preventing the First and Second Respondents from contacting staff or customers, going within 100m of the Business's main premises at Greenhithe (“the Greenhithe Facility”), or otherwise engaging in the Business.
Evidence
In support of application for the purposes of the hearing on 6 October 2023, I read the affidavit evidence of
(1) David Victor Garofalo, the Petitioner;
(2) Jonathan Hawker, communications consultant;
(3) Gary Flood, private investigator appointed after the report of an investigation at the the Greenhithe Facility;
(4) Stephen Diederich, proposed new director of the English Companies;
(5) Dominic Fisher, proposed new director of the English Companies;
(6) Mark Preusch, US licensed private investigator providing a video conversation he had with the First Respondent;
(7) Simon Ayrton, solicitor, proposed Supervising Solicitor;
(8) Graeme Buller, expert in securing date from electronic devices;
(9) Connor James Cleak, expert in securing date from electronic devices;
(10) Danny James Edward Lewis, expert in securing date from electronic devices.
Prior to the adjourned hearing on 9 October 2023, I was provided with and read the affidavits of
(1) Alexander Wilson, solicitor, a second proposed Supervising Solicitor;
(2) David Garofolo, the Petitioner (second affidavit) as to his means.
History of ownership and current shareholdings
The Petitioner is an angel investor. His first involvement with the business was in 2010, when he invested £50,000 for a 15% share in VC1, which the First Respondent was in the process of acquiring from its previous owner in administration. In May 2016, as part of a restructuring programme (“the 2016 Restructuring”), in return for a further investment of £250,000, the Petitioner increased his shareholding resulting in his owning 41.35% of the issued share capital of VC1, and becoming equal partners with the First Respondent, who owned an equal percentage of the shares. The remaining shares (approximately 17.3%) were held by 6 other individuals, all friends or family of the First Respondent, in holdings ranging from 1.34% to 4.69%. In 2018, a further restructuring took place (“the 2018 Restructuring”) in which VHL was incorporated as the ultimate parent of all the companies in the Group. The First Respondent and the Petitioner were appointed as directors. The spread of shareholdings in VC1 was broadly replicated in VHL upon its incorporation.
At the time of the 2016 Restructuring, a number of documents were produced to govern the management, investment and relationship between the various companies and directors. By an executive service agreement dated 4 May 2016, VC1 appointed the First Respondent CEO at an annual salary of £100,000. By a non-executive service agreement in the form of a letter dated 4 May 2016, VC1 and the Petitioner agreed the terms on which he would act as non-executive director at an annual salary of £50,000. Of prime significance was the Relationship Agreement, entered into on 4 May 2016 by the Petitioner, The First Respondent, and VC1, and amended on 3 May 2018 to add VHL as a party at the time of the 2018 Restructuring. The Petitioner relies on the following terms:
i. Recital F: the Petitioner and the First Respondent agreed to be equal partners in VHL and VC1, and they had mutual respect and confidence in one another both individually and in their respective roles within VC1;
ii. Clause 3.2: the Petitioner acknowledged that the First Respondent worked best by being allowed free rein to develop and promote the business of the English Companies without undue interference. Equally, the First Respondent acknowledged that he valued the Petitioner's views as Chairman and personally as his mentor; and that on important issues the First Respondent wished to be consulted as Chairman and decisions made collectively by the Board.
iii. Clause 3.2: The First Respondent, as CEO, was to be responsible for and entitled to manage the day to day running of VC1 and VHL, but agreed to refer to and consult with the Petitioner regarding any “DRM”, being the Director Reserved Matters listed in the Schedule.
iv. The DRM include (i) any change in the jurisdiction where the English Companies' business is...
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