Goldtrail Travel Ltd ((in Liquidation)) v (1) Abdulkadir Aydin and Others (Defendants/Appellants (2nd, and 4th to 6th)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Vos,Lord Justice Kitchin,Lord Justice Longmore |
| Judgment Date | 13 April 2016 |
| Neutral Citation | [2016] EWCA Civ 371 |
| Date | 13 April 2016 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2014/2475 |
[2016] EWCA Civ 371
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
THE HONOURABLE MRS JUSTICE ROSE DBE
CASE No: HC12D02320
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Longmore
Lord Justice Kitchin
and
Lord Justice Vos
Case No: A3/2014/2475
Mr David Eaton Turner (instructed by Adams & Remers LLP) Limited) for the 2 nd, 4 th, 5 th and 6 th Defendants/ Appellants
Ms Hilary Stonefrost (instructed by Fieldfisher LLP) for the Claimant/Respondent
Hearing dates: 16 th and 17 th March 2016
Introduction
This is for the most part an appeal against the judge's findings of fact. But the factual circumstances are convoluted, so that the case appears more complicated than it really is. The underlying transactions that gave rise to the claim concerned an attempt by the primary (first disappeared and now believed to be deceased) wrongdoer, Mr Abdulkadir Aydin ("Mr Aydin"), the 100% owner and sole director of Goldtrail Travel Limited ("Goldtrail"), to sell 50% of his shares in Goldtrail to each of a Hong Kong company, Black Pearl Investments Ltd ("Black Pearl"), and Onur Air Tasimaclik AS ("Onur Air") without the one knowing about the other.
This appeal concerns only the sale to Black Pearl, because the appeal by Onur Air was dismissed by Patten LJ for procedural reasons on 16 th January 2016. Goldtrail went into administration and subsequently liquidation very shortly after these events leaving large numbers of customers stranded overseas in Turkey and Greece, and owing some £20 million to the Air Travel Trust which had to pay for their repatriation. Goldtrail acts in these proceedings through its liquidators (the "liquidators").
Only two aspects of the decision of Mrs Justice Rose are appealed. First, the judge's finding that the appellants had dishonestly assisted Mr Aydin to breach his duties to Goldtrail under section 175 of the Companies Act 2006 ("section 175") by diverting to himself, via a Seychelles company he owned called Morning Light Limited ("MLL"), £1.4 million which would otherwise have been due to Goldtrail (the "section 175 claim"). That money would in the absence of the breaches, according to the judge, certainly have been paid to Goldtrail as payment for an opportunity, namely entering into a 5 year commitment to buy certain airline seats from a Swedish company, Viking Airlines AB ("Viking"), which was indirectly owned as to 40% by Black Pearl.
The second aspect of the judge's decision that is appealed is her finding that the appellants had dishonestly assisted Mr Aydin in misapplying £1.25 million of Goldtrail's money (the "misapplication claim"). The £1.25 million was made up of two sums. The first sum of £750,000 was the total of the deposits made ostensibly for airline seats by Goldtrail to Viking (£250,000) and to another operator, Flight Options Aviation Ltd ("FOAL"), for flights on Saga Airlines (£500,000). The £750,000 was paid to the same broker or charter agent, acting for both Viking and FOAL, namely Meridian Aviation UK Ltd ("Meridian"), and found its way from Meridian to MLL. The other sum was £500,000 which was paid by Goldtrail to Viking without a contractual requirement as what was described as an "accelerated advance flight payment" or the "extra Viking £500,000". It similarly found its way to MLL.
These two claims overlap so that the appellants need to succeed in both parts of their appeal to avoid liability altogether, whilst the liquidators only need to succeed on one or other aspect to preserve the appellants' substantive liability.
Mr David Eaton Turner, counsel for the appellants, put the second claim first, perhaps because he wished to emphasise what he contends to have been the unfairness of the judge's approach. He submitted that the judge allowed the liquidators to pursue an unpleaded case that the appellants never intended to repay the £750,000 of deposits paid by Goldtrail, and that the appellants were thereby unfairly disadvantaged. The consequence was that the appellants say they were deprived of the opportunity of adducing evidence about the normal practices of these parties and in the airline industry of paying and repaying deposits for airline seats. The appellants have argued before us that new evidence to this effect should now be admitted. In particular the new evidence of Mr Halldor Sigurdarson ("Mr Sigurdarson") suggests that there would have been an inflow of money at the end of the 2010 flying season from deposits paid to aircraft owners, from which Goldtrail's deposits would have been repaid.
I intend first to summarise the main elements of the judge's judgment before considering the arguments advanced by the appellants. Before doing so, however, I should say something about the appellants and provide a brief overview of what the judge described as the entire "Black Pearl deal".
The appellants
The 1 st appellant was the 2 nd defendant, Black Pearl, which, as I have said, owned 40% of Viking. The balance of Viking was owned by a Mr Christian Tadjeran ("Mr Tadjeran"). Though criticised, the judge's finding that Black Pearl effectively controlled Viking was not appealed. Black Pearl contracted to buy 50% of the shares in Goldtrail from Mr Aydin. Mr Philip Wyatt ("Mr Wyatt"), the 4 th appellant and also the 6 th defendant, wanted to make Black Pearl the holding company for what he described to the judge as a "vertically integrated travel group" incorporating Goldtrail, Meridian (then owned by his family members), and Viking. The 2 nd appellant was the 4 th defendant, Mr Magnus Stephensen ("Mr Stephensen"), a director of Black Pearl. The 3 rd appellant, Mr Sigurdarson, was the 5 th defendant, and a director of an English subsidiary of Black Pearl, BPI UK Ltd. I shall describe the four appellants together as the "appellants" and the three individual appellants as the "individual appellants".
The Black Pearl deal
Goldtrail was a tour operator specialising in Turkish and Greek holidays. When these events occurred, it had been trading apparently successfully for some 15 years. The Black Pearl deal, anyway according to the liquidators, comprised 5 main agreements, the second and third of which the appellants claimed were a complete sham. They were as follows:-
i) The Black Pearl Sale and Purchase Agreement dated 19 th February 2010 (the "BPSPA") between Black Pearl and Mr Aydin by which Mr Aydin agreed to sell 50% of the shares in Goldtrail to Black Pearl for £500,000 payable by instalments between 19 th February 2010 and 1 st July 2010.
ii) The BPSPA recited in its schedule 2 a further agreement saying that "[Black Pearl] and [Mr Aydin] have agreed the following commercial agreement between [Goldtrail] and Viking" whereby Goldtrail had (a) "committed to purchasing a minimum of 100,000 seats per year from Viking via [Meridian] at market rates" from 1 st May 2010 to 1 st May 2015, and (b) granted to Viking "the first right of refusal to sell to [Goldtrail], all seats required by [Goldtrail], in excess of the 100,000 seats" previously specified (the "Viking 5 Year Seat Commitment").
iii) An agreement between MLL (Mr Aydin's company) and Viking called the "Viking Brokerage Agreement" also dated 19 th February 2010 whereby Viking was to pay MLL, described as the "Broker", £1.4 million in "commission" for successfully introducing the commercial commitments in the VSSA (see below) (by instalments between 22 nd February 2010 and 7 th June 2010). It was and is common ground that MLL provided no brokerage or other services and that the Viking Brokerage Agreement was designed to allow Mr Aydin to receive a further £1.4 million in a "tax efficient manner". In short, it was accepted to have been a tax fraud.
iv) The Viking Seat Sale Agreement (the "VSSA") dated 15 th February 2010 between Viking and Goldtrail provided for the sale of seats on Viking flights to and from Greece over the 2010 summer season setting out all the flights and prices, and recording an advanced payment or deposit of £250,000 due from Goldtrail to Viking no later than 31 st March 2010, which would be refunded by Viking half on 15 th October and half on 1 st November 2010. Other payments for flights were to be made the week before the flights themselves.
v) On 9 th February 2010, Goldtrail entered into another seat sale agreement with FOAL (the "FOAL SSA") for the sale of seats on Saga Airlines for the 2010 summer season on similar terms to the VSSA, save that Goldtrail was to make two deposits of £250,000 each by 19 th and 28 th February 2010 respectively, such deposits being repayable by 4 instalments between 15 th August and 30 th September 2010.
All the payments to be made to the airlines under the VSSA and the FOAL SSA were to be made via Meridian, which was, as I have said, a company associated with the appellants.
The judgment below
I emphasise that what follows is a summary of the main elements of a lengthy and careful judgment. It is not a substitute for a consideration of the whole of that judgment.
The judge began the substantive part of her judgment by explaining why she had concluded that the evidence of each of Messrs Stephensen, Sigurdarson and Wyatt was to be treated with considerable caution and was largely unreliable. She reasoned first that their defence depended on establishing that...
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