JD Classics Ltd ((in Administration)) v Derek Hood
| Jurisdiction | England & Wales |
| Judge | Mr Justice Bryan |
| Judgment Date | 27 October 2021 |
| Neutral Citation | [2021] EWHC 3193 (Comm) |
| Docket Number | Case No: CL-2018-0000815 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 3193 (Comm)
THE HON. Mr Justice Bryan
Case No: CL-2018-0000815
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Rolls Building, Fetter Lane
London, EC4A 1NL
Mr Adam Al-Attar and Jamal Mustafa appeared on behalf of the Claimants
The First Defendant appeared as a litigant in person
The Second and Third Defendants did not attend and were not represented.
Hearing Date 27 October 2021
Approved Judgment
F. JDCL's disclosure application
F1. Introduction:
I have already set out the background to this matter in my judgment in relation to DH' s disclosure application which I delivered yesterday ( [2021] EWHC 3189 (Comm)) and to which reference should be made.
Turning to the JDCL disclosure application, the agreed approach adopted before me was for each of the parties to address me in relation to each of the paragraphs in the order applied for, in the sequence set out in the JDCL disclosure order (the “ disclosure draft order”), following which I have ruled in relation to that paragraph of the disclosure order that is sought.
All orders for disclosure applied for by JDCL relate to documents that DH has already been ordered to disclose by way of extended disclosure, pursuant to the disclosure order, but it is said by JDCL that DH has failed to do so adequately or at all, notwithstanding that DH filed a disclosure certificate dated 24 December 2020 certifying compliance with the disclosure obligations.
As has already been noted, such certification is not a bar to the court making an order under paragraph 17 of PD51U if the disclosure provided by DH is inadequate; see Berkeley Square supra, at [26]. As already addressed, where a party has failed to comply with an order for extended disclosure, paragraph 17.1 of PD51U provides that
“the courts may make such further orders as may be appropriate”, including an order that the party
“undertake further steps, including further or more extended searches”
or
“produces documents”.
Pursuant to paragraph 17.2 of PD51U,
“the party applying for an order under paragraph 17.1 must satisfy the court that making an order is reasonable and proportionate (as defined in paragraph 6.4)”.
In this regard, I have already referred to what was said by Robin Vos (sitting as a deputy judge of the High Court) in the Berkeley Square case, supra, at [61] to [67], in particular (i), that some basis must be shown for going
“behind the process which has already been carried out and the certification of that process”,
but (ii),
“what is required from the parties and the court is a pragmatic and flexible approach taking into account … all the circumstances”.
F2. Paragraph 1 of the draft order, subparagraph 1A
“all copies of the sales and purchase records, including communication by which the first defendant negotiated any such sale or purchases, in relation to all sales and purchases of vehicles by the claimant for the period ranging from January 2014 to January 2019 in which the first defendant was involved” (emphasis added).
This request, which overlaps with many of the categories by its nature and breadth, arises from paragraphs 9 to 11 of the reamended points of claim, which allege that DH had principal control of high-value sales and control of production of sales and purchase records in relation to all sales conducted by him, and most high-value sales. It is also alleged that such sales comprise the alleged fictitious transactions in the RAPOC, and the date range has been identified and agreed by reference to those transactions. The request, therefore, relates directly to an issue in the proceedings, issue 1. Moreover, JDCL submits that there is a sufficient likelihood that such documents exist, as DH has admitted that while he was employed by JDCL, he had responsibility for JDCL's client relationships and sales, even after the acquisition (see paragraph 24 of Hood 1).
In this respect, DH stated in an email to Quinn Emanuel dated 21 May 2021 that:
“any communications went through my company BlackBerry, iPad and PC. I did not have a private mobile phone during my ownership and during the Charme Capital period of JD Classics” (emphasis added).
DH further asserted in his second sworn witness statement (Hood 2), responding to the JDCL disclosure application, that (at paragraph E),
“ all my emails, both personal and company communications, regarding the business were through the company server and my company telephone, which was my only telephone at the time”,
(emphasis added)
i.e. at all times prior to exiting in June 2018. He referred to other personal email accounts, but said that he used these after exiting the company (at paragraph I).
In his skeleton argument filed in respect of the first disclosure hearing, he said that: “the claimant has my BlackBerry phone, which I handed over along with my computer after I resigned. This was my only telephone at the time. My wife then bought me an iPhone in July-August 2018 for my personal use, and I later bought another BlackBerry also, for business use”.
JDCL says that these statements are false — in particular, that there is evidence of other phones in use: an 005 telephone (reference being to the last three digits of the phone), believed to be a BlackBerry; a 464 telephone, which appears to have been in use from at least mid-April 2018, if not earlier; and a 755 telephone, in use from at least August 2018. Those dates, however, are only based on Richard Goddard's disclosure, Mr Al-Attar making the point that phones could have been in use from earlier dates.
For his part, DH says that the 464 number phone was bought for him by his ex-wife around July-August 2018, and he also says he was mentally all over the place, and he believed it was bought after he had left the company. As will be seen, this is contradicted by the evidence. He also says any sales were carried out by JD Classics, notwithstanding any communications between himself and Mr Goddard. Of course, that does not mean that there may not have been relevant communications between him and Mr Goddard. He also says he was very busy when doing disclosure on both trying to set aside his bankruptcy and dealing with an HMRC investigation. He says that it was a mistake that he did not reveal the 755 phone or any messages on it, and that he had purchased it after he left JDCL.
In Mr Goddard' s disclosure are text messages between Mr Goddard and DH which include the telephone number from which it was sent. For example, on 21 May 2018 the 005 number sender is Mr Derek Hood. It is a BlackBerry, and then there are also a series of text messages on 17 April 2018 which are in the same format, including a message from Mr Hood from the phone ending 464. There are a series of messages between them in which Mr Goddard is complaining to Mr Hood about finance payments he has to make on cars that he cannot pay. Then DH says, “I'm on the case”, and he tells Mr Goddard not to be dramatic; it is just a fact. JDCL says these are relevant, as they show Mr Goddard and DH dealing in respect of certain cars together and seeking finance for those cars, in the expectation that they can sell them before finance has to be paid, with a profit before the finance kicks in.
There are also expressions of sympathy and the question arises as to what those expressions of sympathy were about. Mr Al-Attar, on behalf of JDCL, submits that the reason can be seen from a text on 19 April, in which RG is asking how the news has gone down, and it appears that the previous day, on 18 April, Lavender J handed down the first judgment in the Tuke litigation, in which findings of dishonesty were made against DH.
The evidence, therefore, shows that RG and DH were texting one another on a phone that had not been disclosed or searched for, and the period in which that phone and those texts appear to have then been operating is the period from the hand-down of the Lavender J judgment to the administration. As pointed out, this is a most important period in the context of disclosure, as this is the period when allegations of wrongdoing escalated.
In further evidence, there is further phone evidence of text messages between them, and a text message using the phone 005. These are, I am satisfied, undisclosed repositories of documents. They were also linked to Mr Hood's Gmail, and at least one has been in use since May 2015, as shown in the electronic bundle, which is messaging on an iPhone between DH and RG. The earliest message that is there is dated 10 May 2015.
There is also a contemporaneous email from Valerie Shelton, DH's PA, with the subject line “Derek's iPhone”, dated 17 April 2018, just under three months prior to the termination of DH's employment at JDCL. Accordingly, DH had an iPhone while at JDCL, and further, used that iPhone to discuss business dealings with RG. This contradicts DH's statement in the that I have already referred to that: “all business, both company and personal, between the third defendant and myself was via telephone [sic], verbal handshake and JD email server” which is equally inconsistent with RG's statement at Goddard 1 at paragraph 26 that: “My business relationship with Derek was very informal. All our transactions were done via phone … email, text or handshake only”.
This email shows that Mr Hood had asked his PA to add a couple of email addresses to his new iPhone. Further and in particular, DH has failed to disclose any emails sent from, received by or copied to the two personal email accounts referred to, a “Wyckehill” email address and a “Derek Hood” numbered Gmail address (which I do not set out in full a public judgment) — and...
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