Kellar v BBR Graphic Engineers (Yorks) Ltd
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr. Justice Hunt,Mr Justice Hunt |
| Judgment Date | 06 May 2003 |
| Neutral Citation | [2003] EWHC 858 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Claim No. MA2 90496 |
| Date | 06 May 2003 |
[2003] EWHC 858 (QB)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
(MANCHESTER DISTRICT REGISTRY)
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Hunt
Claim No. MA2 90496
Mr. Stephen COGLEY (instructed by Messrs Cobbetts, Solicitors) for the Claimant
Mr. Charles SAMEK (instructed by Chandler Harris, Solicitors) for the Defendant
Hearing dates: 31 st March —3 th April 2003
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 history of this matter is admirably set out in the Judgement of the Deputy Judge Mr Roger Kaye Q.C. who heard the appeal action on the statutory demand. That Judgement (reported at BPIR 2002 544) should be read as a preamble to this judgment which is that in the trial of the claimant's case for judgement on the loan agreement made between the parties in April 1998. As the judgment of Mr Roger Kaye Q.C. sets out, the District Judge dismissed Mr Kellar's application to set aside the statutory demand for £425,000 plus interest on the basis that there was no sufficiently certain agreement put forward by Mr Kellar which would have varied the terms of the loan agreement of 21 st April 1998. Mr Kellar appealed as of right in the insolvency proceedings and that appeal was heard in December 2001. The Deputy Judge found a triable issue which brings us to the hearing before me for 3 days of evidence beginning on Monday 31 st March. I heard Mr Ross, Mr Blakeley, Mr Cunningham and Mr Lo for the claimant and Mr Kellar, Mr Templeton Mrs Heyes, Mr Hall and Mr Turner for the defendant.
All agree that my task having heard the evidence is to decide a number of factual matters the most important of which is what transpired at a meeting between the parties on Monday 11 th January 1999. In particular I must decide whether there was any oral agreement at that meeting to vary the terms of the 21 st April 1998 loan agreement which was itself set out in writing in some detail. I say at once that one of the problems with this case has been the lack of any documentation, agreed minute or agreement relating to that meeting on 11 th January over 4 years ago. Mr Kellar has a note at page 118 which he asserts was made very shortly afterwards in a car park but it omits any mention of a repayment vehicle and at best is simply notes made as an aide memoire for him. It means that all are working from memory in circumstances in which there had been weeks and even months of meetings after September 1998 to try to form a joint venture. That attempt fell apart but the number of meetings leading up to January gives more than a little scope for elision of events and recollections.
Granted the history set out in Roger Kaye Q.C.'s judgement, what was the evidence before me ?
Mr Ross told me of exchanging a commercial debt for a personal debt for what was anticipated to be a short period until the end of September at a very advantageous or, as Mr Samek put it, "eye-watering" rate of interest. He was told Sondhi Kellar was struggling financially but saw a draft of sales expectations which he took seriously and he was told of Select Capital as potential investors but also told that they were not the only possible funders. He later said Birnberg and Bergish were mentioned. After consulting Mr Blakeley they loaned the money which in effect came back to their company in payment of their invoices and they then had the loan agreement. The interest of £10,000 per month was paid in May and June but the invoices for July and August were not paid. That did not trouble Mr Ross for Mr Kellar was often late in paying invoices. It is common ground there was a meeting with Mr Kellar on 17 th September when Mr Ross and Mr Blakeley were told that the potential deal with Select Capital was off. According to Mr Ross, Mr Kellar said he was still looking for other funding and was upbeat. Mr Ross said that he would have wanted to be upbeat because if they withdrew their engineering work or ceased work in hand it would have made his financial position worse. Mr Ross said he asked about the loan and was reassured everything would be O.K. Mr Samek suggested that Mr Kellar was in a panic after the Select Capital loan had fallen through and asked for interest payments to be waived. Mr Ross said no such panic was evident and no such request was made. They carried on working "up to the point of him going into a voluntary arrangement" and "he still has got our funds behind him actually refurbishing the machines". He said he did not know that Sondhi Kellar was going into administration before it did so on 16 th October.
I found Mr Ross to be a down to earth, solid and trustworthy witness. He was poor on recollections of dates and not very quick thinking but I found him to be honest and consistent on the essential issues. He was plainly very impressed with Mr Kellar and the obvious trappings of his supposed wealth, his new house in Manchester and the way he conducted his very large business in which he assumed he had a large shareholding. He did not know that Mr Kellar had a director's loan account by which he owed £425,000 to his company. I accept his account of the 17 th September meeting. The date for repayment of the loan i.e. 30 th September had not yet been reached and I do not believe that Mr Kellar told him of the true financial position. Mr Kellar had every reason to remain upbeat with them until he later had to reveal the bad news of the administration. I note that on 8 th October Mr Ross wrote to Mr Kellar about exercising a lien over 7 printing presses "pending payment of all monies outstanding from you to us". He said that was in respect of work undertaken. I do not believe that letter would have been written in that form had he known that Sondhi Kellar was going into administration or if he had just recently agreed to waive interest payments on the loan.
Mr Blakeley I found to be slow, hesitant, uncertain in giving his evidence and not good at finding his way around the case papers. He told me that he is a sleeping partner, not involved in the accounts of the claimant. As he put it "I just helped David, I'm not in the trade whatsoever". When it was put to him that they had agreed to waive interest he said "Why should we do that?". Having seen him I am satisfied he would not have agreed to do so and did not.
Mr Kellar's case is that at the 17 th September Mr Ross and Mr Blakeley were told the Select Capital deal had fallen through, and they promised to waive future interest payments but wanted him to come back with proposals as to the repayment of the capital sum. He claims they were told in advance of the impending administration on 16 th October. Having seen and heard him give evidence I do not accept that account. I found Mr Kellar to be very familiar with the papers and quick in his thinking. I had the clear impression that he felt the claimants were small businessmen in a lesser league to him and unfamiliar with his wider picture and his larger business which involved a turnover of many millions. When he told me that when he very much later had a demand for a statement of means "I was not prepared to be treated as a supplicant" it was typical of his approach to them. He would not and I find he did not take them into his confidence.
It is common ground there were discussions from the date of administration to December on a possible joint venture. Mr Ross told me this foundered essentially because of the large salaries proposed for Mr Kellar and his financial director Mr McGlynn which he could not agree as it would be "like starting at the last place on the grid". When it was proposed to give key employees shares Mr Kellar said he was not running a kibbutz. According to both Mr Ross and Mr Blakeley those three key employees said they would not work under Steve Kellar. It is plain that all involved were looking at their options post administration and considering where their own best interests lay. They had all known each other many years. I accept that there was a wish expressed among the three employees not to cause financial harm to Mr Kellar and discussions as to how this...
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