Gad Rubin and Another (Respondents/Petitioners) v Andrew James Parsons and Others
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Peter Smith,Peter Smith J |
| Judgment Date | 16 February 2016 |
| Neutral Citation | [2016] EWHC 237 (Ch) |
| Date | 16 February 2016 |
| Court | Chancery Division |
| Docket Number | Case No: 8679/2014 |
[2016] EWHC 237 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
The Honourable Mr Justice Peter Smith
Case No: 8679/2014
Mr Burns (instructed by Turners) for the Respondents/Petitioners
Richard Ascroft (instructed by Rawlins Davy Ltd) for the Appellants/Respondents
Hearing dates: 21 January 2016
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 the appeal of the First, Second and Fourth Respondents to the Petition against the decision of Mr Registrar Baister on 10th July 2015 when he ordered them to pay the Petitioner the sum of £54,000 and the Petitioners' costs to be assessed in detail if not agreed. The latter order is on the basis of a standard basis it not being said to be on an indemnity basis.
The proceedings are an unfair prejudice petition brought by Mr and Mrs Rubin seeking relief against Mr and Mrs Parsons and OFF2 Logistic Services LLP, the LLP the centre of the dispute. The Fourth Respondent OFF2 Executive Travel Ltd was joined as a Respondent by the order of Arnold J on 15th April 2015.
Permission to appeal was granted by Norris J on 16th October 2015.
On 13th January 2016 the Appellant issued an application for relief from sanctions in relation to a breach of an order made on 16th June 2015. I will explain the significance of that order further in this judgment.
BACKGROUND
The dispute concerns the Third Respondent ("the LLP") which was incorporated on 26th April 2011 under the Limited Liability Partnerships Act 2000. The beneficial interest in the LLP is owned by the Petitioners and the First and Second Respondents each owning a 25% share. Its business was a private hire and chauffer business operating in the Bournemouth area.
The relationship deteriorated according to the Amended Petition such that in the autumn of 2014 there were negotiations for a parting of the ways. From that date the Petitioners alleged that they had been excluded from the running of the LLP and denied access to the books. Further they allege that on 30th September 2014 the First and Second Respondents had secretly caused the incorporation of a limited company of which they were the sole shareholders with a similar name to the LLP, OFF2 Executive Travel Ltd (the Fourth Respondent) and had set up a new website. The essence of the Rubins' complaint is that the LLP has been hijacked by the First and Second Respondents and certain of its assets have been misappropriated by them.
After the issue of the petition the Rubins discovered various other matters of complaint and they are set out in the subsequent amendments to the petition (paragraphs 15–23).
It is alleged that the First and Second Respondents as agents of the LLP owe fiduciary duties which have been broken by the various matters complained of.
In the Amended Petition (paragraph 26) the Rubins submitted that the affairs of the LLP have been and are being conducted in a manner which is unfairly prejudicial to the interests of some or other members. What is missing of course is any statement that there is a surplus in the LLP available to the members. That is usually a sine qua non to an unfair prejudice petition. Mr Burns who appears for the Petitioners accepted that the LLP was actually insolvent.
The relief sought in the Amended Petition is significant:-
" 27. The Petitioners therefore pray for one or more of the following forms of relief under section 996 Companies Act 2006 as follows:
(i) That the Parsons be required to buy Rubins' interest in the LLP for £155,000 (i.e. at its June 2014 valuation) or at such other sum as the court deems fit;
(ii) That the Petitioners be given leave to sue the Parsons in the name of the LLP for the loss and damage to the LLP business caused by them;
(iii) the Parsons be required to take all steps necessary to re-assign the business, assets and goodwill which they have stolen back to the LLP;
(iv) that the Parsons be required to give the Rubins full access to and control over the affairs of the LLP;
(vii) that there be an account and enquiry into the Parsons' profit derived from or accumulated in Off2 Executive Travel Ltd and into any other such benefits and profits made by them from their wrongdoing, and payment of those sums to a the LLP.
(viii) that a receiver be appointed to control the affairs of the LLP or wind it up
(ix) interim relief to restrain the Parsons from trading or assisting in the trading of Off2 Executive Travel LTD in competition with the LLP and or that they account to the LLP for benefits made by them from such work until these matters have been resolved
(x) damages for loss of income and future loss at the rate of £2000 per month or in such amount as the court deems fit
(xi) damage for loss of use of the LLP assets
(xii) such other or further relief as the court deems fit."
The amended additions arise from the order of Arnold J of 15th April 2015 and comprise permission to the Petitioners to bring a derivative claim on behalf of the LLP.
RESPONSE OF RESPONDENTS/APPELLANTS
Not to be outdone (a familiar theme in unfair prejudice petitions) the Appellants/Respondents served a Defence and Counterclaim on 9th April 2015. In that document the Appellants accepted the relationships had deteriorated but blamed the Petitioners. They alleged also that the parties excluded each other from parts of the business contending that the petitioners continued to use the LLP's booking system to get jobs but excluded the Appellants/Respondents from it.
They challenged a valuation (see below) of the LLP of £310,000 and denied the allegations of misappropriation of the LLP's business. They also set out allegations of alleged wrongdoing by the petitioners which caused the relationship to deteriorate to the extent that they could no longer work together and it is just and equitable it be wound up (paragraph 22).
The Respondents contended they refused to purchase the Petitioners' interests because the Petitioners' actions allegedly caused the deterioration and loss of value. In paragraph 44 they set out numerous alleged breaches of fiduciary duty committed by the petitioners.
By a Counterclaim they sought an order requiring the petitioners to purchase their shares (the counterpart to the primary claim of the Petitioners) and permission to bring a derivative action on behalf of the LLP.
The Petitioners denied all of this in their Reply and Defence to Counterclaim.
EVENTS LEADING TO THE HEARING
In his order of 25th April 2015 Arnold J (inter alia) ordered the Appellants to provide the following:-
"2. By 4pm on 14th May 2015 the First and Second Respondents shall serve on the Petitioner's solicitor copies of the following documents:
(i) A list of all business transactions including without limitation receipts carried out by the LLP from 1st October 2014 to the date of this order;
(ii) A list of all transactions and the detail of the transactions (including without limitation receipts commissions sales scrapping etc) of which they are aware from 1st October 2014 to the date of this order involving the following vehicles: Ford Galaxy Reg LR590EY; Ford Galaxy Reg LN10VKE; Ford Glaxy Reg LN10VJF; Ford Galaxy Reg LR10HFJ; Mercedes E220 Reg EY10XDH; Ford Tourneo Reg YB14YHY
(iii) A list of all transactions and the detail of the transactions (including without limitation receipts commissions sales scrapping etc) of which they are aware from 1st October 2014 to the date of this order date involving the following vehicles registration numbers respectively: MJ64KHL, MJ64KHC, MJ64KHH and MJ64KJV to the exent that they have been used in private hire or chauffeur business.
(iv) A list of all equipment, logs, licenses, furniture, computers and other LLP chattels which they removed or caused to be removed from the LLP office premises at 6 Suite F3A, Whittle Road Ferndown Industrial Estate Wimborne Bournemouth BH21 7R on or after 1st October 2014."
The Appellants failed to comply with that order and on 16th June 2015 Registrar Baister made an Unless Order against them in respect of paragraphs 2 (ii) and 2 (iii).
It is to be noted that that order is made against all Respondents including the LLP and the additional company.
The order provided that unless the material was provided by 4.30pm on 30th June 2015 the Respondents "shall be debarred from defending the proceedings".
APPELLANTS' RESPONSE
The Appellants provided a large amount of documents but it is jumbled and was not in the form required by Mr Registrar Baister's order. The requirement to list is so obvious so as to not require explanation. It is not for the Petitioners/Respondents to have to work their way through a large amount of documents which are not explained in an attempt to understand what information is being provided. Nevertheless the Petitioners/Respondents' solicitors on receipt of the documents wrote "these documents are not in the form required by the Court Orders but to a great extent do satisfy the terms of the order of 15th April to 16th June with the following obvious exceptions" they then set out 5 items and concluded that "In all of the above circumstances we are of the view that your clients remain in breach of the orders of 15th April and 16th June 2015".
THE HEARING OF 10TH JULY 2015
At the hearing Mr Burns...
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