John Seneschall v Trisant Foods Ltd ((in Liquidation))
| Jurisdiction | England & Wales |
| Judge | Greenwood |
| Judgment Date | 03 May 2023 |
| Neutral Citation | [2023] EWHC 1029 (Ch) |
| Docket Number | Case No: CR-2021-000495 |
| Court | Chancery Division |
[2023] EWHC 1029 (Ch)
ICCJ Greenwood
Case No: CR-2021-000495
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (CHD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Daniel Northall and Ms Sophie Cashell (instructed by Armstrong Teasdale Limited Solicitors) for the Petitioner Professor
Mark Watson-Gandy (instructed by Tees Solicitors) for the 2 nd and 4 th Respondents
Ms Morwenna Macro and Mr Matthew Tonnard (instructed by Ellisons Solicitors) for the 3 rd Respondent
Ms Katherine Hallett (instructed by RWK Goodman) for the 5 th Respondent
Hearing dates: 8–11, 15–18 and 22 November 2022
This judgment (circulated in draft form on 4 April 2023) was handed down remotely at 11.30am on 3 May 2023 by circulation to the parties or their representatives by e-mail.
ICC Judge
| [A] Introduction | Paragraphs 1–15 |
| [B] An Outline of the Background | Paragraphs 16–106 |
| [C] The Witnesses and the Assessment of their Oral Evidence | Paragraphs 107–133 |
| [D] The Relevant Law | |
| [D1] The Unfair Prejudice Claim | Paragraphs 134–145 |
| [D2] The Unlawful Means Conspiracy Claims | Paragraphs 146–150 |
| [D3] “Justification” as a Defence to Conspiracy | Paragraphs 151–160 |
| [E] The Parties' Agreements and Alleged Agreements: the Framework of the Dispute | Paragraphs 161–163 |
| [E1] The Terms of the ISHA | Paragraphs 164–165 |
| [E2] The ISHA: Meaning and Effect | Paragraphs 166–175 |
| [E3] The Terms of the HoTs | Paragraphs 176–177 |
| [E4] The HoTs: Meaning and Effect | Paragraphs 178–181 |
| [E5] The March Proposal | Paragraphs 182–192 |
| [E6] The Redemption Agreement: the Allegation | Paragraphs 193–199 |
| [E7] The Redemption Agreement: Discussion | Paragraphs 200–279 |
| [F] Unfair Prejudice | |
| [F1] Mr Seneschall's Case in Summary | Paragraphs 280–282 |
| [F2] Preliminary Points | Paragraphs 283–300 |
| [F3] The Events of June to November 2019 | Paragraphs 301–350 |
| [F4] June to November 2019: Conclusions | Paragraphs 351–352 |
| [F5] The Events of November 2019 to March 2021 | Paragraphs 353–453 |
| [F6] November 2019 to March 2021: Conclusions | Paragraphs 454–468 |
| [F7] Unfair Prejudice: Remedy | Paragraph 469 |
| [G] Unlawful Means Conspiracy | Paragraph 470 |
| [G1] The Control Conspiracy: June to November 2019 | Paragraphs 471–476 |
| [G2] The Control (& Exclusion) Conspiracy: November 2019 to March 2021 | Paragraphs 477–485 |
| [H] The Market Fresh Counterclaim: the Allegations | Paragraphs 486–517 |
| [H1] The Market Fresh Counterclaim: Conclusions | Paragraphs 518–526 |
[A] Introduction
This is my judgment following the trial of proceedings commenced by Mr John Seneschall (“ Mr Seneschall”) on 17 March 2021, by means of an Unfair Prejudice Petition seeking relief under s.994 of the Companies Act 2006. Mr Seneschall's claims concern the business and affairs of a company, the 1 st Respondent, Trisant Foods Limited (“ the Company”) which was incorporated on 12 February 2018, and went into insolvent compulsory liquidation on 9 November 2021 (after the proceedings had begun) on the petition of an unpaid creditor presented on 24 June 2021. Mr Seneschall was represented by Mr Daniel Northall and Ms Sophie Cashell of Counsel.
Central to the dispute was Mr Seneschall's allegation that he has been the victim of a plan, concealed from him, as a result of which, by means of various steps deliberately taken during the course of 2019 and 2020, control of the Company's business was, over time, wrongfully seized by the 2 nd to 5 th Respondents, or some of them.
The Company's business was in food production and packaging, with an emphasis on baby food; it operated from a factory in South Wales, at Llantrisant, Rhondda Cynon Taf (“ the Factory”) and was founded jointly by Mr Seneschall and the 3rd Respondent, Ms Lynne Jones (“ Ms Jones”). Of the 100 Ordinary Shares issued on incorporation, Mr Seneschall held 75, and Ms Jones held 25; they were also, at that time, its sole appointed directors. Ms Jones was represented by Ms Morwenna Macro and Mr Matthew Tonnard of Counsel.
Mr Seneschall alleged that the Respondents' plan, conceived and beginning in June 2019 “ at the latest” (albeit without the involvement of Ms Jones until “ November 2019 at the latest”) culminated ultimately in his effective exclusion from any meaningful participation in the Company's affairs, such that on 13 July 2020, and although nominally he continued subsequently in office as a director, he was “ suspended on full pay pending an investigation” into “ allegations of gross misconduct” and on 7 September 2020, he was “ dismissed without notice” — a result, he says, of a “ predetermined decision” following a “ sham” investigation based on “ confected” allegations.
In addition to unfair prejudice, albeit on substantially similar grounds, Mr Seneschall alleged (by virtue of amendments permitted by ICC Judge Burton on 31 August 2022, on an application not opposed by the Respondents) an unlawful means conspiracy — the “ Control Conspiracy” — in respect of which he claimed damages, and of which a subsequent “ Exclusion Conspiracy”, in which Ms Jones was said to have participated, was alleged to be a component part, or “ subset”, albeit one capable of independent existence.
Market Fresh Limited (“ Market Fresh”), the 2 nd Respondent, was an investor in the Company, and also a shareholder. It counterclaimed. Its case was that its investment, lost as a result of the Company's insolvent collapse, was made in consequence of Mr Seneschall's deceit and subsequent breach of warranty; that amongst other things, in response to a due diligence enquiry made in June 2019, before it invested, Mr Seneschall told Market Fresh that the Company had “ not stopped payment of its debts, become unable to pay its debts as they fall due or … otherwise become insolvent”, which was not true. Indeed, despite having invested a substantial sum over a significant period, part of the case advanced by Market Fresh and its ultimate owner, the 4 th Respondent, Mr David Marshall (“ Mr Marshall”) was that the Company was at all times insolvent and valueless, so that Mr Seneschall's unfair prejudice claim necessarily fails in limine. Market Fresh and Mr Marshall were represented by Professor Mark Watson-Gandy of Counsel.
Mr Seneschall denied the counterclaim on various grounds, both as a matter of substance and that in any event, Market Fresh was fully aware of the Company's financial state and circumstances, which were openly discussed before it agreed to invest. In the event however that the counterclaim succeeded against him, he claimed a contribution against Ms Jones, that she should pay one half of any sum for which he is liable, because she too was responsible for the responses to Market Fresh, and the later warranty. Ms Jones defended that claim.
The 5 th Respondent, Mr David McCormick (“ Mr McCormick”) was neither a shareholder in the Company, whether directly or indirectly, nor an investor. His involvement was in two capacities: first, he was Market Fresh's titular “Managing Director” (although never formally appointed to the office) and second, in respect of the Company, it was accepted on his behalf by Ms Katherine Hallett of Counsel, who represented him, that by virtue of his involvement in its affairs, certainly between 7 August 2019 and 20 January 2021, he owed the usual duties of a director.
Accordingly, in respect of the Respondents' alleged plans, Mr Seneschall's case was that Mr Marshall was the “ chief-decision maker”; that Mr McCormick conceived and orchestrated those plans as Mr Marshall's “ right hand man”; and that from November 2019, Ms Jones aligned her interests with those of Market Fresh, Mr Marshall and Mr McCormick, and participated in their plans.
Mr Seneschall's claims were denied. In essence, and although their defences (reflecting their different roles and duties) were not in every respect the same, the Respondents' case was that Mr Seneschall was not the innocent victim of a conspiracy, but was instead, a financially irresponsible and indeed dishonest director, unjustifiably resentful of others' legitimate involvement. Their case was that acts said by Mr Seneschall to comprise the wrongful seizure of control ought properly to be characterised as lawful and commercially rational steps designed to bring financial stability and transparency to the Company's affairs, to protect Market Fresh's investment and the value of its shareholding, and to promote the best interests of the Company.
This was a case with a particularly rich documentary record. The chronological bundle comprised over 6,500 pages of documents generated in a comparatively short period, many of them informally and most of them contemporaneously with the events to which they related. In addition, I heard oral evidence from:
i) Mr Seneschall.
ii) Mr Seneschall's wife, Mrs Sally Seneschall (“ Mrs Seneschall”): until about 6 November 2019, Mrs Seneschall also worked for the Company, assisting where she could, both in its administration generally and in particular, although she was not formally qualified in a financial or accounting discipline, by keeping a record of expenditure and indebtedness; she gave evidence in support of her husband's case.
iii) Mr Andrew Williams (“ Mr Williams”): a chartered accountant introduced to Mr Seneschall and Ms Jones by Mr Brian Roberts, a Relationship Manager at “Business Wales” in July 2018; soon afterwards, Mr Williams agreed to become the Company's “Finance Director” (a role in which he was employed to work part-time, for about one day a week) and agreed...
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