Grupo México Sab De CV v The Registrar of Companies for England and Wales
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henry Carr |
| Judgment Date | 25 May 2018 |
| Neutral Citation | [2018] EWHC 1306 (Ch) |
| Court | Chancery Division |
| Docket Number | Case Nos: CR-2015-002084, CR-2015-006635 |
| Date | 25 May 2018 |
[2018] EWHC 1306 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF INFUND LLP
AND IN THE MATTER OF THE LIMITED LIABILITY PARTNERSHIPS ACT 2000
The Rolls Building, 7 Rolls Buildings
Fetter Lane, London, EC4A 1NL
Mr Justice Henry Carr
Case Nos: CR-2015-002084, CR-2015-006635
John Wardell QC and Emily McKechnie (instructed by SCA Ontier LLP) for the Claimants in claim CR-2015-002084
John Machell QC and Dan McCourt Fritz (instructed by Cooke, Young & Keidan) for the second to fifth Defendants in claim CR-2015-002084 and the Claimants in claim CR-2015-006635
Hearing dates: 24 to 27 April 2018
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.
Index
| Heading | Paragraph (s) |
| Introduction | 1 |
| The Parties and the witnesses | 2–14 |
| The dissolution and restoration of Infund | 15–18 |
| Related Proceedings in Mexico | 19–32 |
| The 2003 Restructuring | 33–56 |
| The issues in these proceedings | 57 |
| Relevant Legislation | 58–59 |
| Does the court have power to order rectification of the Register as sought by the Claimants in the Rectification Claim? | 60–78 |
| The nature of factually inaccurate material provided by Mr Garcia on the forms required for administrative restoration | 79–85 |
| The significance of the legal advice provided to Mr Garcia | 86 |
| Was this factually inaccurate material dishonestly provided by Mr Garcia? | 87–95 |
| Were the Corplaw Entities entitled to resign in 2006? | 96–106 |
| Was the information provided by Mr Garcia that Infund was carrying on a business in operation at that time of its dissolution factually inaccurate? | 107–115 |
| Was the information that Infund was carrying on a business or in operation at the time of its dissolution dishonestly provided by Mr Garcia? | 116–120 |
| Did Mr Garcia make false representations to BDO? | 121–133 |
| The Defendants' answers in respect of the accounts | 134–146 |
| Did Mr Garcia and Mr Peralta forge a Mandate? | 147–152 |
| Can this allegation be relied upon by the Claimants? | 153–156 |
| The section 1096(3) considerations | 157–158 |
| Should a declaration be granted? | 159–165 |
| The Restoration Claim | 166–182 |
| Overall conclusion | 183–184 |
Introduction
These proceedings concern the restoration of Infund LLP (“Infund”) to the Register. In claim no. CR-2015-002084 (the “Rectification Claim”) the Claimants seek rectification of the Register (amongst other things) to reverse the administrative restoration of Infund to the Register, which took place on or around 14 November 2011. In claim no. CR-2015-006635 (the “Restoration Claim”), the Claimants seek the restoration of Infund to the Register, in the event that the Rectification Claim is successful and Infund is removed from the Register. The Registrar of Companies took no active part in the proceedings. For convenience, I shall call the Claimants in the Rectification Claim, “the Claimants” and the Second to Fifth Defendants in the Rectification Claim, who are Claimants in the Restoration Claim, “the Defendants”.
The Parties and the witnesses
The First Claimant, Grupo Mexico (“GM”), is a substantial holding company incorporated in Mexico and listed on the Mexican stock exchange. It is involved principally in mining and metallurgy, transportation and infrastructure development. The Second Claimant (“Mr Larrea”) is Chairman and Chief Executive Officer of GM. He is also a shareholder of GM.
Until a few days before the trial, it was thought that Mr Larrea was going to attend the trial to be cross-examined on his witness statement. However, on 12 April 2018 the Claimants disclosed that Mr Larrea was allegedly unable to attend the trial due to a series of GM meetings. A hearsay notice was then served setting out further information and purporting to explain why Mr Larrea was unable to attend court. The Defendants applied to adjourn the trial in the light of this development. In a judgment given on 20 April 2018 ( [2018] EWHC 971 (Ch)) (“the 20 April Judgment”) I dismissed that application. However, I stated that Mr Larrea's explanation for choosing not to give evidence at the trial was patently inadequate, and that I was likely to give vanishingly small weight to his hearsay evidence, given that he had not seen fit to attend the trial without any satisfactory explanation.
The First Defendant to the Rectification Claim is the Registrar of Companies for England and Wales and is joined in that capacity. Since no allegations have been made by any party against the Registrar, and substantive relief is not sought directly against the Registrar, by a letter dated 19 April 2018 the Treasury Solicitor indicated that the Registrar did not intend to be represented at the trial, but requested to be included in the process of drafting any order which the Court might make. The Registrar's understandable concern is to ensure that any order is sufficiently precise, so that whatever action should be taken by the Registrar is clear.
The Second Defendant, Infund, is a Limited Liability Partnership incorporated on 13 June 2003 under the law of England and Wales. Infund was incorporated by the Fifth Defendant (“Pearse”), acting on the instructions of the Third Defendant (“Mr Garcia”).
Mr Garcia is a former employee of businesses in, or related to, GM's group of companies. He was employed from 1 October 1977, and by 2000 had been promoted to General Manager for Special Affairs. On 16 November 2004 Mr Garcia's employment with GM was terminated. Mr Garcia purports to manage and control the affairs of Infund, relying upon documents entitled “Special Power of Attorney” dated 13 June 2003 and 11 August 2003. According to the Claimants, Mr Garcia dishonestly provided false information to enable Infund to be restored to the Register. It is alleged that his purpose in so doing was to use it as a vehicle of fraud to pursue vexatious and dishonest proceedings against GM and Mr Larrea in Mexico.
Mr Garcia, through Infund, has brought a claim in Mexico in respect of many millions of shares (“the Disputed Shares”) issued by GM to Mr Larrea on 17 October 2003, together with cash and share dividends declared in respect of the Disputed Shares. The Disputed Shares and associated dividends are worth approximately $1.5 billion as valued in June 2016. The Claimants allege that the claim to the Disputed Shares by Mr Garcia, through Infund, is plainly dishonest and is supported by obvious forgery. The restoration of Infund was required by Mr Garcia to bring this claim in Mexico, as the Mexican courts have held that, personally, he has no standing to pursue it.
Shortly before the hearing on 20 April 2018 the Court was informed that a conditional hearsay notice had been served in respect of Mr Garcia's witness statements and that he had returned to Mexico. It was said that Mr Garcia was willing to attend the trial to be cross-examined, provided that Mr Larrea did likewise; in other words, Mr Garcia considered that his attendance was conditional upon Mr Larrea's attendance.
Mr Machell QC, for the Defendants, submitted that it would be unfair for Mr Larrea to refuse to be cross-examined in an attempt to secure a tactical advantage and obtain a collateral benefit in relation to the Mexican proceedings, but nevertheless for his legal team to be able to cross-examine Mr Garcia. I held that, as with Mr Larrea, it was Mr Garcia's choice whether to attend the trial. I rejected the submission that it would be unfair for him to be cross-examined if Mr Larrea did not attend the trial. That submission was based on the implied assumption that their evidence was of equal importance. I stated that Mr Garcia's evidence was self-evidently more important than the evidence of Mr Larrea.
Mr Garcia is accused of most serious allegations of fraud and forgery. Mr Larrea served a short statement giving an account of his recollection of events in 2003. He did not give any evidence about fraudulent misrepresentations because those matters are outside his personal knowledge. Only Mr Garcia is able to answer questions about those issues. At [16] of the 20 April Judgment I said:
“Mr Wardell QC, on behalf of the claimants, submits that if, contrary to the submissions to be made on behalf of the defendants, I decide to consider the merits, then it is possible to prove the case of fraud and forgery based on the documents. If that is so, the overwhelming inference will be that if he chooses not to attend, Mr Garcia has done so because he is a fraudster and a forger and is not prepared to be cross-examined. It is still open to Mr Garcia, if he wishes, to attend the trial to be cross-examined.”
Nonetheless, and in spite of the 20 April Judgment, Mr Garcia did not attend the trial for cross-examination. In the circumstances, as with the evidence of Mr Larrea, I have attached very little weight to Mr Garcia's hearsay evidence and have relied upon contemporaneous documents.
The Fourth Defendant (“Corplaw Ltd”), together with a related company, Corplaw Management Ltd (together the “Corplaw Entities”), is incorporated in Ireland. The Corplaw Entities were named as original members of Infund. The Corplaw...
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