Griffith (Petitioner) v Gourgey and Others
| Jurisdiction | England & Wales |
| Judge | Mr S Monty |
| Judgment Date | 13 November 2014 |
| Neutral Citation | [2014] EWHC 4440 (Ch) |
| Docket Number | Case Nos: 1805/2013, 1806/2013 and 1807/2013 |
| Court | Chancery Division |
| Date | 13 November 2014 |
[2014] EWHC 4440 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building
7 Rolls Building, Fetter Lane, London
EC4A 1NL
Mr S Monty QC
Sitting as a Deputy Judge of the Chancery Division
Case Nos: 1805/2013, 1806/2013 and 1807/2013
In the Matter of Bankside Hotels Limited
And in the Matter of the Companies Act 2006
In the Matter of Pedersen (Thameside) Limited
And in the Matter of the Companies Act 2006
In the Matter of G &G Properties Limited
And in the Matter of the Companies Act 2006
Mr Christopher Parker QC and Mr Oliver Phillips (instructed by Blake Morgan LLP) appeared on behalf of the Petitioners
Mr Andrew Marsden (instructed by The Robert Davies Partnership LLP) appeared on behalf of the Respondents
Mr S Monty QC:
Introduction
The petitioners have brought three unfair prejudice petitions under section 994 of the Companies Act 2006 in respect of three companies. Whilst the petitions have not formally been consolidated, there is a single set of pleadings and they are being case managed and will be tried together.
The petitioners served Amended Combined Points of Claim on 7 March 2014. The respondents served Amended Consolidated Points of Defence on 24 March 2014, Points of Reply having been served on 3 September 2013.
The issues for determination today are whether the respondents have failed to comply with an unless order and, if so, whether the Amended Points of Defence have been struck out or whether the respondents are entitled to relief from sanction.
The petitioners are represented by Mr Christopher Parker QC and Mr Oliver Phillips. The respondents are represented by Mr Andrew Marsden.
Background
In the petitions the petitioners make three main allegations. First, the petitioners say that a director of the companies caused the companies to transfer money to other companies in which the director has an interest, which monies were said to have been used for his benefit and without the petitioners' approval and to the petitioners' detriment. The respondents say that the petitioners were aware of the practice of making such payments, which are variously admitted or denied. Secondly, the petitioners allege that the director diverted a corporate opportunity from one of the petitioners' companies to its detriment. The respondents say that the petitioners consented to this. Thirdly, the petitioners say that the director has misconducted himself in relation to the proceeds of sale of other company properties and has failed to provide accounting information. The respondents dispute the petitioners' account of how the proceeds of sale were to be and were in fact treated. Overall by the petitions the petitioners seek an order for the purchase of their shares in the companies and, or alternatively, an order that the respondents sell their shares in one of the companies.
The Request for Further Information
On 3 September 2013 the petitioners served a Request for Further Information of the Amended Points of Defence. It set out 88 separate requests under 44 paragraphs or subparagraphs of the Amended Points of Defence. The covering letter from Morgan Cole, solicitors for the petitioners, now Blake Morgan LLP, and the Request itself required a response by 17 September 2013. On 10 September 2013 Pinsent Masons, then the solicitors for the respondents (the respondents' solicitors are now The Robert Davies Partnership LLP), asked for further time to reply and said that they would be responding to the Request for Further Information by 4pm on 22 October 2013. There does not appear to have been a response to that letter and Pinsent Masons wrote again on 16 September asking for confirmation of the further time requested. Morgan Cole wrote on 17 September 2013 agreeing to the request to serve a response by 22 October. On 4 October Pinsent Masons wrote again to Morgan Cole, this time asserting that the Request was "neither reasonable nor proportionate", asserting that the respondents need not respond "to wide and unfocused requests", and saying that all these points can be dealt with in evidence. Morgan Cole wrote on 11 October saying that they inferred from the letter of 4 October that the respondents would not be responding to the Request for Further Information despite the previous indication that a response would be provided by 22 October, and that they were considering with their clients an application for an order under CPR Part 18. No response was received by 22 October and on 3 November 2013 the petitioners applied for an order that the respondents provide a response to the Request.
On 3 March 2014 Mr Robin Hollington QC sitting as a Deputy Judge of the Chancery Division ordered by consent as follows:
"The Respondents do provide a full response to the Petitioners' request for further information pursuant to the letter of Morgan Cole dated 3 September 2013 by 4pm on 21 March 2014."
The respondents did not comply with that order, which I shall refer to as "the consent order".
On 4 April 2014 the actions came on for a case management conference before Rose J, who made a number of directions including the following two orders:
"3. The Respondents do file and serve their response to the Petitioners' request for Further Information dated 3 September 2013 by 4pm on 22 April 2014.
4. Unless the Respondents comply with paragraph 3 within the time specified, the Points of Defence be struck out."
I shall refer to these two paragraphs as "the unless order".
On 22 April 2014 before 4pm the respondents filed and served a document which purported to be in compliance with the unless order. It was not verified by a signed statement of truth. According to the petitioners it did not answer all the requests, and I will return later in this judgment to the reasons put forward by the petitioners for saying that it did not.
In his witness statement of 5 June 2014 Mr Hill of the solicitors for the respondent says that the reason the response was not verified by a statement of truth was that the unless order did not make express provision for it to be certified by a statement of truth, but that he intended to have one and that one of the two copies of the response printed out did contain a statement of truth; however, by mistake an unsigned rather than a signed copy was filed and served. As soon as he was made aware of this, when the petitioners' solicitors pointed it out, he sent a copy with a signed statement of truth to the court and to the petitioners' solicitors. This was on 6 May 2014.
On 27 May 2014 the petitioners applied for revised directions on the basis that the respondents had not complied with the unless order and the points should be struck out. On 5 June 2014 the respondents applied for "relief (if needed)" from the alleged breach of the unless order.
The alleged breach of the unless order
The petitioners say that the response was defective in two respects. First it did not contain a signed statement of truth as required by CPR 22.1(b); secondly it failed to give a proper answer or in some cases any answer at all to many of the requests.
(1) No signed statement of truth
As to the first alleged defect, the position is as follows.
13.1. Mr Marsden says that on its face the unless order did not specify that the response had to bear a signed statement of truth. That is of course right but in my view it is also irrelevant.
13.2. A Response to a Request for Further Information is a statement of case; see the interpretation section of CPR at 2.3 and the definition of statement of case and see also the latest White Book at 22.1.9.
13.3. A statement of case must be verified by a statement of truth; see CPR 22.1(a).
13.4. Further, Practice Direction 18.3 says, "Attention is drawn to Part 22 and to the definition of a statement of case in Part 2 of the Rules. A response should be verified by a statement of truth".
13. 5. CPR 22.1(b) expressly requires responses to a request for further information to be so verified.
13.6. Where there is a failure to verify a statement of case, CPR 22.2 provides that a statement of case shall remain effective unless struck out but the party may not rely on a statement of case as evidence of any of the matters set out in it.
13.7. I note also the court has power to require a document to be verified by a statement of truth; see CPR 22.4.
13.8. It is clear therefore that the failure to verify a response to a request for further information by a signed statement of truth does not make the document a nullity. Since it is a statement of case it remains effective unless struck out; see CPR 22.2(1)(a). It is not struck out simply by virtue of the absence of a signed statement of truth.
13.9. The document is now filed and served albeit later than the date in the unless order and verified by a signed statement of truth.
For these reasons in my judgment the response did not fail to comply with the unless order simply by virtue of the fact that it did not contain a signed statement of truth.
(2) The alleged inadequacy of the response
As to the second alleged defect, the petitioners say that the respondents failed to give proper answers to the requests.
The petitioners say that the consent order required the respondents to "provide a full response" to the request for further information and by doing so the respondents waived any right to object to the...
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