Katherine Merry and Ben Dyer (joint liquidators of Safe Depot Ltd ((in Liquidation))) v Sabir ESA
| Jurisdiction | England & Wales |
| Judge | Mullen |
| Judgment Date | 31 July 2023 |
| Neutral Citation | [2023] EWHC 2011 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2017-004190 |
In the matter of Safe Depot Limited
And in the matter of the Insolvency Act 1986
[2023] EWHC 2011 (Ch)
ICC JUDGE Mullen
Case No: CR-2017-004190
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Royal Courts of Justice,
Rolls Building,
Fetter Lane,
London EC4A 1NL
Ms Katherine Hallett (instructed by Howes Percival LLP) for the Applicants
The Respondent did not appear and was not represented
Hearing dates: 18 th to 19 th April 2023
Approved Judgment
This judgment was handed down remotely at 10am on 31/7/23 by circulation to the parties or their representatives by e-mail and by release to the National Archives (see eg https://www.bailii.org/ew/cases/EWCA/Civ/2022/1169.html).
ICC JUDGE Mullen
By an application notice dated 10 th March 2021, Ms Katherine Merry and Mr Ben Dyer (“the Liquidators”), as joint liquidators of Safe Depot Limited (“the Company”), brought claims against Mr Sabir Esa and a company called Stone Key Limited (“Stone Key”). The application, as it relates to Mr Esa, alleges breaches of duties owed to the Company, including by allowing it to enter into transactions at an undervalue, to give preferences or to enter into transactions defrauding creditors for the purposes of sections 238, 239 and 423 of the Insolvency Act 1986 (“IA 1986”), together with wrongful trading under section 214 IA 1986.
The evidence of Ms Merry in support of the application exhibited draft points of claim and, on 15 th June 2021, directions were given for the filing and service of points of defence by Mr Esa and points of reply by the Liquidators. On the same date, the application as it related to Stone Key was stayed as a result of that company having gone into creditors' voluntary liquidation.
Further directions were given on 11 th October 2021. At that stage Mr Esa had failed to file any points of defence but he had filed a witness statement dated 10 th August 2021, to which Ms Merry had responded in a further witness statement, dated 7 th September 2021. The Liquidators took no issue with the absence of points of defence and it was directed that a list of issues should be filed and served prior to trial, to be agreed if possible, in order to set out the matters in issue between the parties. The order recites that the Liquidators were to keep the need for expert evidence under review and would consider whether it was necessary following disclosure between the parties. In the event, no application for expert evidence to be adduced was made.
An order for the sharing of books and records between the Liquidators and the liquidators of Stone Key was made on 16 th November 2021. The liquidators of Stone Key took no further formal part in the proceedings and the claim against that company was automatically struck out on 1 st January 2022 under the terms of the order for a stay.
The matter came on for trial in April 2023. Ms Merry attended to give evidence on behalf of herself and Mr Dyer, as did Mr Donald Adamson, who was a site manager for the Company from around June or July 2008 to September 2013 and then again from December 2013 to December 2016. He also claims to be a creditor of the Company, having not received his redundancy pay or full wages. Mr Esa did not attend. He emailed the court on 14 th April 2023 with a doctor's note and said that he was suffering from depression and anxiety and would not be able to attend. He did not ask for an adjournment but this was proposed in his doctor's note. The evidence was inadequate to justify an adjournment and this was conveyed to Mr Esa by an email from the court office, which prompted a further email from him on 17 th April 2023 in the following terms:
“I am writing to clarify my previous email to the court. I wish to make it clear that I was not requesting an adjournment, per se, of the hearing scheduled for the 18th. Instead, I am writing to inform the court that, due to my mental health issues, I am unable to attend the hearing scheduled for the 18th. I want to stress that my mental condition has deteriorated to a point where I am not capable of defending myself if I were to attend. As the court is aware I have been suffering from severe depression and suicidal tendencies for which I have been receiving treatment. I have attached a letter from my doctor confirming my mental incapacity to attend.
I hope that the court can take my condition into account and make the necessary arrangements to ensure that my rights are upheld.”
No further evidence that might have justified an adjournment of the hearing was provided.
In the absence of Mr Esa, Ms Merry was not cross-examined. Her evidence was limited to confirming the contents of her witness statement and answering a few further questions in evidence in chief as to the extent of the Liquidators' attempts to obtain company documents. I accept Ms Merry's evidence, which is principally based on the documents available to her and the interviews that Mr Esa gave to the Official Receiver and to the Liquidators. I similarly accept that she has explored the lines of enquiry available to her in order to track down the Company's records, of which what she describes as “large tranches” remain missing. Mr Adamson simply confirmed the truth of his short witness statement. It is consistent with the available contemporaneous documents and there is no reason to doubt it. I accept his evidence too.
As Mr Esa did not attend for cross-examination, at which point he would have had the documents in evidence put to him, Ms Hallett, who appeared for the Liquidators, took me carefully through the available documents in submission and addressed the points raised by Mr Esa in his witness statement in answer to the application. I also had a list of issues prepared by the Respondent. That, like his evidence, makes some general allegations about the conduct of the Liquidators, together with the accuracy of the transcript of an interview with the Liquidators conducted by Skype on 18 th January 2018, and the availability of documents for him to conduct his defence.
Ms Hallett raised two points with me about the documents in particular. The first concerned whether privilege attached to “without prejudice save as to costs” documents between the Company and the creditor on whose petition the Company was wound up. I was satisfied that any such privilege had been waived, for reasons that I gave at the time.
The second concerned the availability of the books and records of the Company. As I have said, I accept that the Liquidators have made enquiries as to the location of the Company's books and records and that Mr Esa has been given the opportunity to provide any records in his possession. Mr Adamson's unchallenged evidence as to the Company's computer on which certain records may have been kept was that this was removed in around January or February 2017 and taken to the Company's premises in Blackburn. Ms Merry's similarly unchallenged evidence was that the Company's computers had not been provided to her. Mr Esa appears to have continued to have access to Company records as he sent the Liquidators some draft management accounts, printed on 3 rd January 2019, which suggests that information was available to him long after the repossession of the Company's premises and the winding up order.
I should say that the evidence before me did not suggest that the Liquidators had documentation available to them that was not available to Mr Esa and nor did it show any properly focused requests for documents by him. A diffuse request was made in February 2022 and was answered by a detailed email of 25 th May 2022 and Mr Esa did not refine his requests further as asked by the Liquidator's solicitors.
That being so, once the Liquidators have shown that Mr Esa or his corporate vehicle, Stone Key, received property of the Company, it is for him as a fiduciary to show the propriety of that receipt ( GHLM Trading Limited v. Maroo [2012] EWHC 61, per Newey J, as he then was, at paras 148–9). Once the Liquidators have made out a prima facie case, it is not open to Mr Esa:
“to escape liability by asserting that, if the books and papers or other evidence had been available, [he] would have shown that [he was] not liable in the amount claimed”
( Re Mumtaz Properties [2011] EWCA Civ 610 per Arden LJ, as she then was, at paras.16–17). I bear those principles in mind.
I should also say that Mr Esa's complaints about the Liquidators' pursuit of the claim are either immaterial to the claim or are unparticularised. He raises the fact that the solicitors now instructed by the Liquidators also acted for the petitioning creditor in the petition. That does not affect the merits of the claim. He also challenges the accuracy of the transcript of the interview he attended with the Liquidators by Skype in general terms but does not point to any particular inaccuracy in it, despite it having been in evidence since September 2021. I accept the material accuracy of the transcript for the purposes of this case.
Background
The Company was incorporated on 8 th April 2002. It operated as a provider of storage space for rent operating from three sites in the north west of England:
i) Unit G, Carlinghurst Business Park, George Street West, Blackburn, Lancashire BB1 1PL (“the Blackburn Premises”);
ii) Units 1 and 3, Bracken Trade Park, Dumers Lane, Bury BL9 9QP (“the Bury Premises”); and
iii) 1–2 Russell Road, Birkenhead, Merseyside CH42 1RP (“the Birkenhead Premises”).
The Blackburn Premises were also the registered office address for the Company.
The Company was wound up on the petition of Mr Geoffrey...
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