Hague Plant Ltd v Martin Hartley Hague
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE BARLING,Mr Justice Barling |
| Judgment Date | 11 October 2018 |
| Neutral Citation | [2018] EWHC 2517 (Ch) |
| Docket Number | Case No's: 2LS30214 |
| Court | Chancery Division |
| Date | 11 October 2018 |
[2018] EWHC 2517 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS IN LEEDS
BUSINESS LIST (Ch D)
Manchester Civil Justice Centre
1 Bridge Street West, Manchester, M60 9DJ
THE HONOURABLE Mr Justice Barling
Case No's: 2LS30214
A30LS033
Mr Christopher Parker QC (instructed by Walker Morris) for the Claimant
Mr Gregory Pipe (instructed by Mr Tranter in-house solicitor) for the First & Third Defendants
Ms Margaret Griffin (instructed by Kieran Clarke Green) for the Second Defendant
Hearing dates: 27 – 28 February & 20 – 21 March 2018
INDEX
| HEADING | Para |
| Introduction | 1 |
| Background | 4 |
| The immediate issues | 36 |
| Was the Second Order mandatory with respect to the amendments? | 46 |
| Discussion and conclusion | 64 |
| Effect of the claimant's breach of the Second Order | 75 |
| Right to elect | 79 |
| Is the claimant in breach of the “unless” element of the Second Order? | 82 |
| (1) Non-compliant Statement of Truth | 82 |
| (2) The substance of the Replies | 83 |
| The nature of the pleaded allegations | 84 |
| Claimant's ambivalent attitude to the original claim | 89 |
| The topsoil claim | 97 |
| The labour and equipment claim | 101 |
| The claim for supply of scrap | 107 |
| Discussion and conclusion: Replies: claims in paragraph 20(2) RAPC | 108 |
| Effect of my conclusions about the Replies: relief from sanctions | 115 |
| The tipping claim | 116 |
| Discussion and conclusion: the tipping claim | 126 |
| Effect of my conclusions | 130 |
GLOSSARY OF DEFINED TERMS
| TERM | PARA WHERE FIRST DESCRIBED | DEFINITION |
| “Hague 5” | 2 | The present claim, which was begun in 2011. |
| “the PI Judgment” | 3 | The judgment given by Norris J dated 26 October 2016, in which he decided certain preliminary issues in the present case. |
| “Martin” | 4 | Martin Hague, the first defendant in these proceedings, a former director of the claimant company (“Plant”) and of the third defendant (“MHH”). He is the brother of David and Dianne. |
| “Plant” | 4 | The claimant company in these proceedings. |
| “MHH” | 4 | MHH Contracting Limited, the third defendant in these proceedings. |
| “JAH” | 4 | Jean Angela Hague, the second defendant in these proceedings, and wife of Martin Hague. |
| “David” | 4 | David Hague, shareholder and director of Plant, Martin's and Dianne's sibling. |
| “Dianne” | 4 | Dianne Hague, shareholder and director of Plant, and Martin's and David's sibling. |
| “Carlisle St” | 5 | The waste recycling site in Sheffield, owned by MHH. |
| “the Consequentials Judgment” | 8 (Footnote 6) | A judgment of Norris J dated 24 February 2017 in these proceedings, dealing with the effects of the PI Judgment. |
| “the November Judgment” | 10 | A judgment of Norris J in these proceedings, dated 30 November 2017. |
| “the First Order” | 14 | The order of Norris J on 24 February 2017 in which the Judge inter alia directed that each party's replies to any Part 18 request should be filed by 21 April 2017. |
| “the Request” | 16 | The Part 18 Request for Further Information served by the defendants' solicitors on the claimant's solicitors on 24 March 2017 pursuant to the First Order. |
| “the Amendment Judgment” | 20 | A judgment of Norris J dated 2 August 2017 dealing with both the claimant's application to re-re-amend the particulars of claim, and the defendants' application for an “unless” order in relation to the claimant's non-compliance with the Request. |
| “Hague 6” | 21 | A separate claim issued by the claimant against the defendants on 9 January 2014, and based in whole or in part on the same allegations as were sought (without success) to be included in the present claim by the claimant's application before Norris J to re-re-amend the particulars of claim. The Hague 6 proceedings are currently stayed generally pursuant to an order of Norris J dated 1 April 2014. |
| “the Second Order” | 22 | An order of Norris J dated 9 November 2017, reflecting Norris J's conclusions in the Amendment Judgment, and including an “unless” order in respect of the Request. |
| “the RRAPC” | 23 | Re-Re-Amended Particulars of Claim served by the claimant on 31 August 2017 following the Amendments Judgment. |
| “the RAPC” | 23 | Re-Amended Particulars of Claim, served 31 March 2014. |
| “the Replies” | 30 | The claimant's replies, served on 31 August 2017, to the Request served by the defendants on 24 March 2017 pursuant to the First Order. |
The Hon.
Introduction
Several issues have been raised at this CMC, which represents the latest in a lengthy, hard fought and acrimonious series of proceedings between members of a family. There are now applications for relief from sanctions, on the part of the claimant, and for the claim to be struck out, on the part of the defendants. Further issues in connection with a separate but related claim 1 were originally intended to be dealt with at the same time as these applications, but at an early stage in the hearing a consensus emerged that those matters would need to be dealt with separately, not least in view of the time required for these applications. The claimant is represented by Mr Christopher Parker QC, and the defendants are represented by Mr Gregory Pipe.
The sorry history of the litigation goes back to about 2008. The present action (known as “Hague 5”), which was begun in 2011, has involved more than 20 interlocutory applications. The two with which I am dealing have taken 4 days of oral submissions.
It is necessary to set out some of the background and procedural history in order to render this judgment intelligible. I shall do this as briefly as possible. Much detail is already contained in the judgment of Norris J of 26 October 2016, in which he decided certain preliminary issues in the case (“the PI Judgment”). 2
Background
The first defendant, Martin Hague (“Martin”), was a director of the claimant company (“Plant”) and is a director of the third defendant (“MHH”). The second defendant, Jean Angela Hague, (“JAH”), is Martin's wife. Also intimately involved in the family businesses were David Hague (“David”) and Dianne Hague (“Dianne”) who are Martin's siblings, and Douglas and Jean Hague (“Jean”) who are the parents of
Martin, David and Dianne. David, Dianne, Martin and Jean are owners of Plant. The ownership of MHH was the subject of earlier litigation between David/Dianne as claimants and Martin and JAH as defendants. This resulted in a judgment of HH Judge Behrens QC, who held 3inter alia that all the shares in MHH were legally and beneficially owned by Martin and JAH. The outcome of that case appears to have led to the present claim.For many years prior to 2009, Plant and MHH shared a site owned by MHH at Carlisle Street East, Sheffield (“Carlisle St”) where waste processing/recycling and waste transfer operations were carried on. Both Plant and MHH carried on business there. In the judgment referred to above HH Judge Behrens QC made the following statement:
“The arrangement was beneficial for both Plant and [MHH]. Materials would be brought to site by Plant or third parties, [MHH] would charge a tipping fee, which in Plant's case was less than the commercial rate, Plant employees would recycle the material either by crushing or screening as appropriate, Plant would sell the recycled product or materials. Insofar as any of the original material was waste or not recyclable, [MHH] would pay Plant to transport it to a tip. The arrangement proved profitable for both Plant and [MHH].” 4
David and Dianne caused Plant to bring the present proceedings against Martin, JAH and MHH, the essential contention of which is that over a period of approximately 23 years Martin consciously and dishonestly breached his fiduciary and director's duties to Plant by procuring payments, goods and services from Plant to MHH far in excess of any value or payment provided by MHH to Plant, and that MHH and JAH dishonestly assisted him in that regard. 5
One particular of this allegation relates to the alleged payment by Plant of “false invoices” rendered by MHH. The alleged invoices and payments were admitted and averred by the defendants in their defence. They contended that these were pursuant to a practice known as “cross-invoicing”, which had been an habitual arrangement within the parties' businesses, known to and accepted by all concerned, throughout the material period. Cross-invoicing involved one company rendering to the other an invoice for fictional services with a view to reducing the incidence of corporation tax in a particular year. Payment of tax would only be delayed, as a false invoice for a similar amount would be raised by the other company at a later period, with a view to reaching a neutral position as between the companies.
The trial of preliminary issues took place before Norris J in 2015. The issues to be determined posed a number of questions, including “Were the unjustified payments made pursuant to a cross-invoicing arrangement? Were the payments each way calculated to balance out? Was the practice known to or consented to or authorised by David and Dianne as co-directors of Plant? Did the payments in fact broadly balance out?” 6 In the PI Judgment Norris J answered each of these questions in the affirmative. He made an express finding that cross-invoicing was “known by, permitted by and participated in by Plant, by Dianne and by David”, rejecting David
and Dianne's denial of knowledge of the arrangement. 7 In relation to the issue whether, in the light of the answers to the cross-invoicing questions, Plant could now put forward a case based on the inaccuracy of...To continue reading
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