Fern Advisers Ltd v Adrian Burford (1st Defendant) Amber Kennard (2nd Defendant) Westover Medical Ltd (3rd Defendant) Sushinho City Ltd (4th Defendant) Hedgerow Management Ltd (5th Defendant)
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Mackie,Judge Mackie,JUDGE MACKIE QC |
| Judgment Date | 01 April 2014 |
| Neutral Citation | [2014] EWHC 762 (QB) |
| Docket Number | Case No: HQ13X02392 |
| Court | Queen's Bench Division |
| Date | 01 April 2014 |
[2014] EWHC 762 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Mackie QC
Case No: HQ13X02392
Anthony de Garr Robinson QC and Clare Reffin (instructed by Herbert Smith Freehills) for the Claimant
Mr Burford, the 1 st Defendant appeared in person
Hearing dates: 12 and 13 February 2014
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.
His Honour Judge Mackie QC
Judge Mackie QC:
This is an application by the Claimant ("Fern") for summary judgment on its claims against its former director, the First Defendant ("Mr Burford"). Fern says that between April 2012 and March 2013, Mr Burford used his position as Fern's executive director to steal more than £12 million from Fern's bank account. Fern says that he used this money to keep various ailing businesses afloat, to fund an extravagant lifestyle and to buy Broadwell Manor, an estate in Gloucestershire. Mr Burford admits that he took the money and used most of it as Fern alleges but he says that the money was either lent to him by Fern or otherwise spent in good faith for the company's purposes. He also says that any liabilities he owes are more than offset by a counterclaim for lost future earnings. The question on this application is not who is right but this. Has Fern shown that Mr Burford has no real prospect of successfully defending the claim?
In its Claim Form Fern alleges, against Mr Burford, fraudulent misappropriation and breach of his position as officer and director. Fern seeks damages for deceit, breach of trust and a range of related causes of action. The claim against the Second Defendant is in constructive trust and arises because she is Mr Burford's wife and Broadwell Manor was bought in joint names. She has been served with and given notice of the application although it does not seek relief against her. There are claims, essentially in restitution, against the other three Defendants, all companies who received some of the money and associated in different ways with Mr Burford. The application seeks no relief against these three Defendants.
Procedural background
This action was commenced on 18 April 2013, when a freezing and disclosure order was made. Mr Burford, then represented by solicitors Brown Rudnick, gave some disclosure on 25 April 2013. Particulars of Claim were served on 16 May 2013. On 10 July 2013, a receiver was appointed to sell Broadwell Manor, on Fern's application.
On 19 July 2013, default judgment was given against Hedgerow, the Fifth Defendant for £258,096 after a hearing before Burton J. Fern's claim against Hedgerow was for £460,035 but, at the hearing, Hedgerow (represented by Mr Burford) claimed that it had a defence to the extent of £201,939. The judge gave Hedgerow two weeks to submit evidence justifying the asserted defence, and a draft Defence. On 2 August 2013, Mr Burford submitted a witness statement, but no draft Defence and, with Hedgerow, also issued applications for extensive disclosure and other relief, as to which directions were given on 9 August 2013 by Swift J. Mr Burford did not list the applications for hearing or otherwise pursue his claim for disclosure. Despite this he contends on this application that his Defence depends on important documents that he says Fern has withheld. No draft Defence or Counterclaim has been produced but I bear in mind Mr Burford's position as a litigant in person.
This application was issued in August 2013 but the hearing fixed for November 2013 was adjourned because it was only then that Mr Burford served any evidence. Mr Burford had hoped to have representation from Counsel but has had to act as a litigant in person. The to and fro about evidence on this application reflects the fact that Mr Burford is now a litigant in person and faces many pressures. Fern says that this is part of a deliberate campaign to spin out the case. Fern is right in the sense that Mr Burford's defences were only revealed in his witness statement of 6 November 2013 and are new. It is also unfortunate that Mr Burford did not disclose the fact that he has been made bankrupt.
Bankruptcy
Mr Burford was made bankrupt on 10 January 2014 in the Worcester County Court on the petition of Advanced Electrical Systems Limited. Mr Clive Everitt of Shaw Gibbs has recently been appointed Mr Burford's trustee in bankruptcy. After taking advice from counsel, Mr Everitt agreed that this court should determine this application. The petition was presented in August 2013. Fern was unaware of it or of the fact of Mr Burford's bankruptcy until 20 January 2014. Pursuant to section 285(1) of the Insolvency Act 1986, this action is not stayed. There is a power in the court to stay actions against bankrupts, but such actions continue unless that power is exercised. There is no presumption in favour of a stay. Fern says that the Court should determine the issue of what its claim as a creditor is and whether property in Mr Burford's name forms part of the bankrupt estate. Fern says that its claims against Mr Burford are in respect of fraud and that, under Section 281 (3) of the Insolvency Act 1986, Mr Burford will not be released from any liability in respect of those claims, which therefore need to be determined by court proceedings. The costs of the application have now been incurred (and the great bulk of them were incurred before the appointment of Mr Everitt). Mr Burford submits that the issues in this case should be resolved within his bankruptcy, and on the first day of the hearing I treated him as having made an application under s285 Insolvency Act to stay the action against him on that basis. For the reasons given by Fern, and because of the position taken by the Trustee, I refused Mr Burford's application.
Evidence
The evidence on this application consists of ten bundles of documents including numerous witness statements made in the course of the action of which the following are the most relevant. For the Claimant there is an affidavit and a witness statement from Mr Ildar Uzbekov, a former colleague and fellow director of Mr Burford at Fern, and witness statements from Mr Paul McKenna, a former director of Sushinho Limited, a company that received some of the money, Mr Jonah Anderson a solicitor from Dechert LLP who took a 'confession' from Mr Burford in March 2013, Mr Robert Montague of RKM Entertainment who was shown a forged letter of comfort ostensibly from Coutts in March 2013, James Cecil who confirms that a purported letter dated 12 June 2012 appearing to come from him was forged, Mr Daniel Welker, an investment banker who acts for the Shchukin family, Mr Alexis Tsielepis, a chartered accountant qualified in England and Cyprus who looks after the Shchukin family assets and trusts in Cyprus and from Fern's solicitors. The Shchukin family have substantial interests in Russia, particularly in the coal business, and provided the money that has gone astray. I also considered a witness statement, filed in costs proceedings, by a partner in Speechly Bircham who had acted for Fern. The Defendant relies on his witness statement of 3 November 2013 which is 81 pages long but exhibits no contemporaneous documents and on one from his wife, the Second Defendant.
Parties
Mr Burford is a man of high intelligence and has impressive experience. According to his cv he obtained a Senior Exhibition to a Cambridge College and after graduation worked for some years for McKinsey & Co, in two spells, and the Foreign and Commonwealth Office. He also co-founded and developed some substantial businesses including Pitcher & Piano and Boden. In recent years he has run a boutique management consultancy. Things must have taken a turn for the worse because by 2012, according to his disclosure, Mr Burford faced financial pressures and had few assets.
The Second Defendant is Mr Burford's wife and the couple have three young children. Dr Kennard is a medical doctor and like Mr Burford had shares in the Third Defendant ("Westover"). Westover supplied medical services. Dr Kennard was the chief executive of Westover and Mr Burford was a director.
The Fourth Defendant ("Sushinho") is in the restaurant business. Mr Burford was a director and held shares.
Hedgerow, the Fifth Defendant, was a company with interests in Botswana and elsewhere controlled and operated by Mr Burford who owned most of the shares and was the sole director.
The hearing
The hearing lasted its full two days because Counsel for Fern rightly wanted to ensure that all the relevant documents were shown to the Court so that Mr Burford would have a proper opportunity to deal with the issues. Similarly Mr Burford needed a full opportunity to put his case across. By agreement Mr de Garr Robinson would deal with one or two issues at a time and then Mr Burford would respond. This seemed preferable to requiring Mr Burford to respond to all issues in a single oral submission. As Mr Burford is a litigant in person I gave him the last word. However at the end of the second day Mr Robinson had only just started his reply. I agreed that the Reply could be completed in writing and this was submitted on 22 February 2014. Once I had seen this written submission I considered that Mr Burford should have an opportunity to respond and gave him until 7 March to do so. Mr Burford had not responded by 12 March. On 13 March the Claimant's solicitors wrote to me seeking to put it in additional...
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