Julie Anne Davey v James Money

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Fancourt,Mr. Justice Fancourt,Mr Justice Snowden,MR JUSTICE SNOWDEN
Judgment Date12 July 2018
Neutral Citation[2018] EWHC 766 (Ch),[2018] EWHC 1781 (Ch)
Docket NumberCase No: HC-2016-001255,Case No: CR-2012-012276
Date12 July 2018

[2018] EWHC 1781 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

INSOLVENCY AND COMPANIES LIST (Chd)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

THE HONOURABLE Mr. Justice Fancourt

Case No: HC-2016-001255

Between:
Angel Group Limited (in liquidation)
Angel (London) Limited (in liquidation)
Angel Wakefield Limited (in liquidation)
Angel Heights Development Limited (in liquidation)
Claimants
and
Julie Anne Davey
Defendant

Mr Robert Anderson QC, Mr Harry AdamsonandMr Andrew Trotter (instructed by Jones Day) for the Claimants

Mr Geoffrey Kuehne (instructed by Signature Litigation LLP) for the Defendant

Hearing dates: 1, 2, 10, 11, 14–18 May, 6, 7 June 2018

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.

THE HONOURABLE Mr. Justice Fancourt

Mr. Justice Fancourt Mr Justice Fancourt

Introduction

1

The Claimant companies, acting by their liquidators, bring these claims against the Defendant, Ms Davey, to recover properties (or their proceeds of sale) in California, Israel and Northern Cyprus (“the Properties”) and for compensation for breach of trust or breach of fiduciary duty.

2

Before the Claimant companies went into administration in October 2012 or April 2013, and then liquidation in December 2015, Ms Davey was their only director. She held all but one of the shares in the First Claimant (“AGL”), which was the holding company for the Angel group. The other share was owned at all relevant times by Valeshaw Limited, a dormant company owned by Ms Davey that was eventually dissolved on 7 March 2017. The other claimants are wholly-owned subsidiaries of AGL. Another limited company that features in the story, Angelic Interiors Limited (“Angelic”), is owned by Ms Davey and is not a subsidiary of AGL. It too is in liquidation.

3

Before the administration, at some time between April 2009 and July 2011, Ms Davey purported to transfer to herself personally the beneficial interest in the Properties, which had previously been held on trust by her pursuant to declarations of trust made on 30 April 2007 and 30 April 2008 (“the Trust Deeds”) and treated as owned by the Second Claimant (“Angel London”).

4

The main issue in this claim is whether such transfer was effective, or whether the Defendant continued to hold the properties on trust for AGL or other Claimant companies at the times when they were subsequently sold by her. There is an initial issue of interpretation of the Trust Deeds: Ms Davey contends that the Properties are only held by her on trust for the Claimant companies to the extent that any of them contributed to their original purchase prices.

5

Ms Davey's case is that the Properties remained owned beneficially by her, save for part of one of the Israeli properties; and in the alternative that AGL's beneficial interest in the Properties was lawfully sold to her, subject in the case of the Californian properties to substantial mortgage debts, the purchase price being funded by a dividend or dividends and otherwise by her director's loan account with AGL. The liquidators of the Claimant companies dispute the validity of all the company resolutions relied upon by Ms Davey. They contend that the documents that are relied upon in support of her case were fabricated and are false records of events that never took place.

6

There are two discrete further issues. First, whether the 2008 Trust Deed declared an effective trust in favour of AGL of £900,000 standing to the credit of identified bank accounts. Second, whether Ms Davey was personally entitled to £550,000 paid by the Secretary of State into her Israeli personal bank account in January 2012 or whether those monies belonged to the Second Claimant.

The procedural history

7

The proceedings have taken an unusual course.

8

The claim form was issued in April 2016 and the Defence filed in September 2016. This pleaded that the Trust Deeds were either effective only to the extent that any of the Claimant companies had contributed to the purchase of the Properties (as to which the Claimants were put to proof) or alternatively void for uncertainty. It averred that Ms Davey had substantially funded the purchase of the Properties herself. It further pleaded that on 11 May 2010 Ms Davey made resolutions of AGL declaring a dividend of £11million and that payment of the dividend be made by transferring the Claimants' purported beneficial interest in the Properties to her, subject to the mortgages. By mistake, the resolutions were not documented at the time but were documented at an unspecified later time by a Mr French, an employee of another company in the Angel group.

9

In March 2017, Ms Davey provided a draft amended defence. This pleaded the following three matters:

i) The two Israeli properties and the most valuable Californian property had in fact been wholly funded by a company called Angelic House Developments Limited (“Developments”), which was not an AGL subsidiary, and were held by Ms Davey on resulting or constructive trust for Developments, with the result that, so far as those properties were concerned, the Trust Deeds and any purported transfer of the beneficial interest in them were ineffective (para 12A).

ii) In 2009, mistakenly believing the two Israeli properties to be owned by AGL, Ms Davey caused AGL to declare a dividend of £7.2million, of which £5.2million was to be paid by a transfer of the beneficial interest in those properties, which was recorded in minutes of board and shareholder meetings of AGL dated 30 April 2009 (para 20A).

iii) The £11million dividend of AGL declared on 11 May 2010 remained unpaid, since AGL had no title to transfer the Properties and had not done so, and so AGL was indebted to Ms Davey in that amount (para 50).

10

By February 2017, the Claimant companies had obtained undertakings or proprietary injunctions in Israel and in this court freezing the proceeds of sale of the Israeli properties and the largest Californian property, Vista del Mar. It was then understood by the Claimants that the other properties had been sold and the proceeds dissipated.

11

With a letter dated 13 April 2017 from her then solicitors, The Khan Partnership LLP (“TKP”), Ms Davey sent copies of certain minutes referred to in paragraph 20A of the Amended Defence. These were minutes of a board meeting of AGL of 30 April 2009 resolving to pay a dividend of £7.2million and minutes of a meeting of the board and the members of AGL of the same date, which noted that Ms Davey held the Israeli properties on trust for AGL and that it was agreed that, in consideration of £5.2million to be deducted from the dividend, the beneficial interest in the Israeli properties was to be transferred to Ms Davey and that the previous declaration of trust was no longer effective or valid.

12

These documents were later explained by TKP in a letter dated 9 June 2017 as having been found by Ms Davey “intermingled with some of her personal files”. No other copy of these signed documents exists in the Claimant companies' records, though electronic records show that the text of them was first created in July 2009. TKP's letter further explained that the signed documents so provided and the amendment in paragraph 20A of the Amended Defence were to be relied upon “in order to provide the factual background to the reasons for entering into the May 2010 dividend and resolution”.

13

Owing to default by Ms Davey, disclosure and inspection did not take place until November 2017, following an unless order dated 25 October 2017. As a result, exchange of statements of witnesses of fact was due on 8 December 2017. Two hours before the deadline for exchange, TKP notified the Claimants' solicitors that Ms Davey had insufficient funds to prepare witness statements and would not be complying further with the directions of the Court until some funds were released to enable her to do so.

14

The Claimants applied for an unless order relating to exchange of evidence. Ms Davey applied for an order varying the freezing injunction in this court so as to permit her to use some of the proceeds of sale to fund her legal representation. Both applications were heard by His Honour Judge Hodge QC on 21 February 2018. He dismissed the application to vary the injunction and ordered that Ms Davey be debarred from calling factual evidence at trial unless she applied for relief from sanctions. He expressed astonishment that no effort appeared to have been made on behalf of Ms Davey either to prepare her witness statement or to apply for relief against sanctions. He deprecated the considerable resources that had instead been devoted to seeking to release frozen funds. He set a new timetable for exchange of expert evidence.

15

No application was subsequently made for relief against sanctions relating to evidence of witnesses of fact, nor was any such evidence served on behalf of Ms Davey. She failed to serve any expert evidence. TKP came off the record on 8 March 2018. New solicitors, Warren's Law and Advocacy, wrote to the Claimants' solicitors on 20 March 2018 stating that they were instructed but only for the purpose of applying for an adjournment of the trial. Those solicitors did not serve notice of change of representation until 13 April 2018, when they also issued an application for an adjournment of the trial due to start on 1 May 2018 until after September 2018, on grounds that Ms Davey was too unwell to represent herself as a litigant in person. Still no application was made for relief against sanctions.

16

I heard the adjournment application on the first day of trial. I rejected the application as I was satisfied that Ms Davey had the resources available to her to fund representation and because...

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