Hawkes and Another v County Leasing Asset Management & Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Arnold |
| Judgment Date | 24 February 2015 |
| Neutral Citation | [2015] EWHC 1929 (Ch) |
| Docket Number | Case No: HC13BO1684 |
| Court | Chancery Division |
| Date | 24 February 2015 |
[2015] EWHC 1929 (CH)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Arnold
Case No: HC13BO1684
Approved Judgment
This is an application by the claimant, Mark Hawkes, for permission to amend his claim form and particulars of claim in these proceedings. It is right to record at the outset that, as can be seen in particular from the judgment of the Court of Appeal in previous proceedings between the same parties, County Leasing Asset Management Ltd v Michael Green Plant Ltd [2012] EWCA Civ 53, Mr Hawkes has been the victim of scandalous behaviour on the part of at least some of the present defendants. Accordingly, he is entitled to sympathy. Nevertheless, it does not follow that he is necessarily entitled to amend his claim form and his particulars of claim in the way that he seeks to do. Regrettably, the background to the matter is of some complexity and I must therefore try and explain it, albeit as simply and shortly as I can.
Mr Hawkes was the director and shareholder in a number of companies, including in particular a company which was then called Michael Green Plant Ltd, subsequently sometimes referred to in the various pieces of litigation as "MGP1". By autumn 2004 the company was in serious financial difficulties. It owed some £312,000 to HMRC. On 7 October 2004 HMRC petitioned to wind up MGP1 on that debt. That petition was due to be heard on 17 November 2004. MGP1 had assets in the form of plant and machinery and also approximately 45 acres of land in Northamptonshire, which I will refer to as "the property". The property was valued in January 2004 at £140,000. Mr Hawkes wished to raise a sum of the order of £350,000 to pay off MGP1's debts. He was introduced by an associate to the third defendant, Andrew Kirkpatrick, the director and owner of the first two defendants, County Leasing Asset Management Ltd and County Leasing Ltd ("CLAM" and "CL").
Mr Kirkpatrick in turn introduced the fifth defendant, Gordon Cook, as an independent consultant with experience of helping distressed and insolvent companies. As a result of discussions between Mr Hawkes, Mr Kirkpatrick and Mr Cook, a scheme was put together by which MGP1 was to be put into voluntary liquidation, although later it was decided it would be better to put it into administration. A Mr Valentine was appointed in due course as administrator of MGP1 on 28 January 2005. By that point it was agreed that funds of approximately £225,000, rather than the originally envisaged or hoped for £350,000, would be raised by means of the sale by MGP1 to CL of its assets, including the property, followed by leasebacks to two new companies, Quotepool Ltd and a company at that time known as Telerate Ltd. Slightly confusingly, that company subsequently changed its name to Michael Green Plant Ltd in a name swap with the company previously known as Michael Green Plant Ltd. Accordingly, it is often referred to in the litigation as "MGP2".
The effect of the scheme was intended to be to enable the business to be continued through these new companies. Cross-guarantees were required not only from the new companies but from Mr Hawkes personally. Mr Hawkes was required to, and did, appoint Mr Cook's business, called Chard Wallis, to assist with, originally, the voluntary winding up of the company, later on the administration.
Although a series of agreements were entered into pursuant to this scheme, including in particular for present purposes a contract for the sale of the property to CLAM and CL, which was entered into on 16 December 2004 and completed following the administration on 31 January 2005, of the total of £225,000 that was supposed to have been paid for MGP1's assets (in fact £25,000 of that money related to assets owned by an associated company called Green Plant Sweepers Ltd), only about £40,000 was received by the administrator. It appears that £50,000 plus VAT was paid to a partnership between Mr Kirkpatrick and his wife, the fourth defendant Susan Kirkpatrick, called County Leasing Corporate Services, a figure that was described by Mr Cook contemporaneously as "an agreed kickback". A further sum of £80,750 was paid by CL to Mr Cook. There were also various other payments allegedly made which resulted in the proceeds of the various transactions being dissipated rather than paid to the administrator of MGP1.
MGP1 subsequently went into creditors' voluntary liquidation. It is relevant to note that on or about 10 November 2006 a draft report was sent by either the administrator or the liquidator – Mr Valentine, I should say, acted in both capacities – to the DTI, setting out various allegations in relation to MGP1 and the transactions that have been entered into. The relevance of that is that as a result Mr Hawkes had all the essential information he needed to bring proceedings, not long after the date of that report.
Mr Valentine was released as liquidator on 29 January 2009 and allowed MGP1 to be dissolved on 29 April 2009.
In 2008 proceedings were brought by CLAM and CL against MGP1 and other parties in the Northampton County Court, essentially to enforce the agreements in respect of which MGP1 was by then in default. There were separate proceedings in respect of the property and in respect of the equipment.
Mr Hawkes and his companies defended the proceedings and counterclaimed on the basis of misrepresentations said to have been made to Mr Hawkes by Mr Kirkpatrick and Mr Cook at the time the scheme was set up. Those proceedings came on for trial before HHJ Hampton in August 2010. In her judgment, which was handed down in its final form on 16 December 2010, she found in favour of Mr Hawkes and his companies and she accordingly dismissed the claims by CLAM and CL.
As far as the counterclaim was concerned, in relation to remedies she stated as follows:
"63. It follows that the claimants are not entitled to enforce equipment leases in their claims for delivery up of the outstanding and in damages are dismissed. It is accepted that save for the guarantee agreement rescission is no longer available. Insofar as it is necessary, I rescind to the guarantee agreements.
64. In relation to the sale of the land, the vendor was MGP1, now Telerate, and not a party to these proceedings. The court has no power to make any order in relation to that transaction. However, I find that the lease of the land to Quotepool is to be rescinded and it is of no effect."
( Quote unchecked)
She went on to award damages in relation to the equipment. In relation to the property she held that, the leaseback of the land to Quotepool having been rescinded, the land was being occupied by Mr Hawkes' companies pursuant to a tenancy at will. Accordingly, she held that CL was entitled to possession of the land. CLAM and CL sought to appeal against the judgment of HHJ Hampton. Permission to appeal was refused so far as the property was concerned, but it was granted in relation to the quantum of damages on the equipment. It was that appeal which was the subject of the decision of the Court of Appeal to which I referred earlier. In the result, the Court of Appeal dismissed the appeal. It should be noted, however, that Elias LJ, who gave the leading judgment, recorded at paragraph 7 of his judgment that the respondents to the appeal "conceded that rescission was not available but sought damages by way of counterclaim".
In the meantime Quotepool had made a number of applications to stay HHJ Hampton's order for possession of the property. Ultimately, however, a final application was refused at a hearing on 8 November 2013, as a result of which CL took possession of the property later that month.
On 3 September 2010 Mr Hawkes and the company I have referred to as MGP1 made an application for an order pursuant to section 1029 of the Companies Act 2006 that MGP1 be restored to the register of companies and a liquidator be appointed. On 30 November 2010 an application for a limitation direction pursuant to section 1032(3) of the 2006 Act was also made. The reason for that application was that any claim based on the sale of the property had become time-barred on 22 December 2010, six years after the date of the contract for sale.
On 19 October 2011 Vos J, as he then was, made an order restoring MGP1 to the register. He appointed a Mr Nicholson of Hazlitts as liquidator and the application for a limitation direction was adjourned to allow Mr Nicholson time to investigate the matter and decide what to do. In the event, Mr Nicholson invited the parties to bid for the assignment of MGP1's claims against the present defendants. Mr Hawkes was successful and the claims against the first to fourth defendants were assigned by MGP1 and Mr Nicholson to Mr Hawkes on 18 September 2012 and the claims against Mr Cook and his wife, the sixth defendant, Karen Cook, were assigned on 5 February 2013.
The claim form in these proceedings was issued on 29 April 2013. On 2 September 2013 an order was made by Master Bragge extending time for service of the claim form and...
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