Jake Veasey v Colin MacDougall
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 12 April 2022 |
| Neutral Citation | [2022] EWHC 864 (Ch) |
| Docket Number | Case No: CR-2020-BRS-000092 |
| Court | Chancery Division |
[2022] EWHC 864 (Ch)
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: CR-2020-BRS-000092
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BRISTOL
INSOLVENCY AND COMPANIES LIST (ChD)
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
James Wibberley (instructed by Foot Anstey LLP) for the Petitioners
Martin Budworth (instructed by Hill Dickinson LLP) for the First and Second Respondents
The Third and Fourth Respondents were not present or represented
Hearing dates: 10 February 2022
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.
Introduction
This is my judgment on two applications for specific disclosure made in this unfair prejudice petition concerning the affairs of two companies (the third and fourth respondents). One application is made by the petitioner against the first and second respondents, and the other is made by the first and second respondents against the petitioner. The petition itself was presented on 18 August 2020, points of defence were filed on 6 November 2020, and a reply was filed on 5 December 2020.
The first of the two applications was made by notice issued 7 December 2021 by the petitioner. It is supported by three witness statements of Peter Singfield (the petitioner's solicitor) and opposed by a witness statement of Fiona Parry (one of the first and second respondents' solicitors). The other was made by notice issued 2 February 2022 by the first and second respondents. It is supported by a witness statement of Kate Steele (another of the first and second respondent's solicitors). In the usual way, the companies themselves have taken no part in the litigation. Accordingly, from this point on, when I refer to “the respondents”, I mean to refer to the first and second respondents only, unless otherwise specified.
The two companies concerned by this petition respectively own and manage a zoo. The petitioner and the respondents are shareholders in both. The petitioner has 42% of the former company and 20% of the latter. The respondents (who appear to be in a relationship) have the remainder of the shares in each case. The petitioner's case in summary (which is denied by the respondents) includes allegations that the purchase and development of the zoo was to be a joint venture between the petitioner and the first respondent, with the petitioner as the operator, or animal director, of the zoo, but the first and second respondents have squeezed the petitioner out, have made inappropriate staff hires, have mismanaged the zoo and misused company funds, and have paid themselves excessive remuneration.
The relevant provisions in the statements of case are as follows:
1. Paragraph 29 of the petition alleges the first respondent refused to pay the petitioner a salary from either of the companies until February 2015. This is denied in paragraph 31 of the points of defence.
2. Paragraphs 33 to 35 of the petition make allegations concerning the bank borrowing of the companies, which the petitioner says was not necessary. He says that the £600,000 capital provided by the shareholders should have been sufficient to cover both the acquisition costs and the initial working capital needs. The petitioner is concerned that the first respondent's refusal to disclose the company's bank accounts may hide the use by the first respondent of this capital for his own purposes. These allegations are denied in paragraphs 35 and 36 of the points of defence.
3. Paragraph 43 of the petition alleges a deliberate attempt by the first respondent to force the petitioner to limit or cease his involvement in the zoo. This allegation is denied in paragraph 45 of the points of defence.
4. Paragraphs 61 and 62 of the petition allege that the respondents purported to declare the petitioner's role redundant, but say that this was a sham. This is denied in paragraph 60 of the points of defence.
5. Paragraphs 65 and 66 of the petition allege mismanagement of the zoo by the respondents, giving as examples
(a) “multiple avoidable animal deaths”,
(b) the reissue of the zoo's operating licence after the petitioner's departure subject to 21 conditions, and
(c) the confiscation of firearms from the first respondent following an investigation into the first respondent by the police.
These allegations are denied in paragraphs 62 to 66 of the points of defence.
6. Paragraphs 67 to 69 make allegations of misuse of company funds, giving as examples
(a) charging the first respondent's private rental accommodation to the operating company,
(b) charging the cost of commuting between the first respondent's home and the zoo to the operating company,
(c) charging the cost of foreign trips taken by the respondents to the operating company, and
(d) charging excessive “motor and travel expenses” of the respondents to the operating company.
These allegations are denied at paragraph 57 of the defence.
7. Paragraphs 78 to 82 allege that the lack of profitability of the zoo is the result of deliberate suppression of profits by the respondents, by diverting income from or charging expenses to the operating company which are not justified. These allegations are denied in paragraph 70 of the points of defence.
Procedure
These proceedings are subject to the disclosure pilot scheme in CPR Practice Direction 51U. On 21 April 2021 I gave directions for the future conduct of the proceedings. By paragraph 7 of my order the parties were ordered to provide disclosure pursuant to the List of Issues (annexed to the order) in model D in respect of each issue, by 2 July 2021. The parties subsequently agreed to extend the date for provision for disclosure to 6 August 2021, and I made a consent order on 29 July 2021 to that effect. The petitioner provided his disclosure on 6 August 2021. The respondents did not. Just before 4 PM on that day they told the petitioner that they had technical problems, meaning that they were unable to give disclosure then, but that they hoped to do so the following week. In fact, by my order of 14 August 2021, time was agreed to be extended to 20 August 2021 for the respondents to give disclosure. On that day the respondents indeed gave disclosure.
However, on 17 September 2021 the petitioner wrote to the respondents seeking disclosure of documents said to have been omitted from that given on 20 August 2021. The respondents replied on 24 September 2021. The respondents at the same time challenged the disclosure given by the petitioner. The petitioner responded to that on 5 October 2021, and the respondents replied in turn on 19 October 2021.
Further correspondence passed between the two sides on 28 October 2021, 8 November 2021 and 26 November 2021. In their letter of 26 November 2021 respondents said they hoped to reply substantively by no later than 10 December 2021. In fact, the petitioner issued his application notice on 7 December 2021. On 14 December 2021 the respondents provided a further reply and some further disclosure. On 15 October 2021 further disclosure was provided electronically. To a certain extent, this has narrowed the issues.
The petitioner's application notice
The petitioner's application originally sought disclosure in the following terms:
“1.) The First Defendant provide a witness statement within 14 days confirming:
a. whether he owned any computers between 2014 to date and what has happened to those computers; and
b. listing the hard copy records of the Defendants which (1) exist and (2) which have been searched by the First to Fourth Defendants as part of the disclosure process to date, including details of which records have been provided to Hill Dickinson LLP and whether those records were provided in full or selectively.
2.) To the extent the First Defendant owned any computers between 2014 to date and has retained them, the Defendants shall search those computers for relevant documents using the agreed key word searches in the Disclosure Review Document (as subsequently amended and agreed by the parties in correspondence) for the time periods set in the Disclosure Review Document for each disclosure issue and any relevant documents shall be disclosed within 14 days.
3.) The Defendants shall provide disclosure of the following categories of document together with an updated disclosure certificate and list within 14 days:
a. Credit Card Statements for the company credit cards related to the Third and Fourth Defendants used by the First and Second Defendants between 2014 to date
b. Bank Statements for the Third and Fourth Defendants from 2014 to date
c. The underlying documentation supporting the following expenses charged to the company in each financial year from 2014 to date: Motor Expenses, Travel Expenses, Rent / Accommodation;
d. Records of any payments of legal expenses by the Third or Fourth Defendant in respect of these proceedings (to include any payments to Knights plc or Hill Dickinson LLP);
e. Reports from the I-Zettle system for each financial year from 2014 to date if not yet disclosed;
f. Unredacted payroll records of the Fourth Defendant for each of the financial years from 2014 to date; and
g. Animal Stock lists from each of the financial years from 2014 to date
h. Details of any dividends paid to or loans advanced to the First and Second Defendant by the Third or Fourth Defendant between 2014 to date.”
On 22 December 2021, the court sent out a notice of hearing of the petitioner's application for 20 January 2022, for a remote hearing via MS Teams, with a time estimate of three hours. The same day, the petitioner wrote to the court explaining that...
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Jake Veasey v Colin MacDougall
...2022. Paul Matthews HHJ 1 On 12 April 2022 I handed down judgment on two disclosure applications in this unfair prejudice petition: [2022] EWHC 864 (Ch). One was made by the petitioner by notice dated 7 December 2021. The other was made by the first and second respondents (to whom I shall ......