Knaresborough Investments Ltd v Styles & Wood Group Ltd ((in Liquidation))

JurisdictionEngland & Wales
JudgeNigel Cooper
Judgment Date05 June 2024
Neutral Citation[2024] EWHC 1356 (Comm)
CourtKing's Bench Division (Commercial Court)
Docket NumberCase No: CL-2023-000360
Between:
Knaresborough Investments Limited
Claimant
and
(1) Styles & Wood Group Limited (In Liquidation)
(2) Philip Nicholas Lanigan
(3) Anthony Stephen Lenehan
Defendants

[2024] EWHC 1356 (Comm)

Before:

Nigel Cooper KC sitting as a High Court Judge

Case No: CL-2023-000360

IN THE HIGH COURT OF JUSTICE

KING'S BENCH DIVISION

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMMERCIAL COURT

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

James Pickering KC and James A Davies (instructed by Hewlett Swanson) for the Second & Third Defendants/Applicants

Derrick Dale KC and Daniel Schwennicke (instructed by DAC Beachcroft) for the Claimant/Respondent

Hearing dates: 10 May 2024

This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 on Wednesday 05 June 2024.

Nigel Cooper KC:

Introduction

1

This is my judgment on an application dated 21 February 2024 made by the Second and Third Defendants (“the Applicants”) pursuant to Rule 3.1(2)(f) of the CPR to grant either an extension of time of some seven months for service of their Defence or to grant a stay of this action until twenty eight days after a decision on an application dated 03 May 2024 made by the Applicants in the Insolvency and Companies List (Chancery Division) to set aside an assignment agreement made between the Claimant and the First Defendant (“the Set Aside Application”). The assignment agreement in question is an agreement for the assignment of certain claims, which the First Defendant may have against the Applicants and is the basis of a parasitic claim which the Claimant brings against the Applicants in this Claim.

Factual Background

2

What follows is necessarily a summary of the relevant facts. However, for the purposes of this application, I have considered the two application notices and the Particulars of Claim as well as reading the correspondence and other documents to which I was referred by the Applicants and the Claimant, the two witness statements of Mr. Dunnill and the witness statement of Ms. Skipp.

3

The claim relates to events in 2017 to 2018 and to the purchase by Extentia Group Limited (“Extentia”) of the entire share capital of the First Defendant (then known as Styles & Wood Group Plc) in a project named “Project Revie”, which completed on 08 March 2018 by virtue of a court sanctioned scheme of arrangement pursuant to Part 26 of the Companies Act 2006.

4

Prior to the completion of Project Revie:

i) The Applicants were directors of the First Defendant; and

ii) The First Defendant was listed on the Alternative Investment Market.

5

During the course of Project Revie, the First Defendant had professional advisers including Hill Dickinson LLP, PricewaterhouseCoopers LLP and Shore Capital and Corporate Limited (collectively “the Professional Advisers”).

6

During the course of Project Revie, the First Defendant provided detailed financial information to Extentia to enable Extentia to conduct financial and commercial due diligence. It is the provision of that information and representations said to have been made by or on behalf of the First Defendant and by the Applicants in their personal capacity which are the subject of these proceedings. The claims made by the Claimant are two-fold:

i) A claim as assignee of Extentia against the First Defendant and the Applicants in respect of alleged erroneous information and/or representations, which it is said induced Extentia to acquire the First Defendant's shares and thereby caused Extentia loss.

ii) Parasitic on the claim against the First Defendant, a claim against the Applicants as assignee of the First Defendant for alleged breaches of duty that the Applicants owed to the First Defendant as directors to recover the loss suffered by the First Defendant brought about by the claim advanced by the Claimant.

7

The Applicants were employed by Extentia following the completion of Project Revie as Group Financial Officer and Chief Executive Officer respectively.

8

Extentia went into administration on 28 February 2020 and the First Defendant went into liquidation on 13 July 2020.

9

By two deeds of assignment dated 29 June 2023:

i) The joint administrators of Extentia assigned to the Claimant all claims that Extentia might have arising from Project Revie against, inter alia, the First Defendant and the Applicants.

ii) One of the First Defendant's liquidators assigned all claims that the First Defendant might have against, inter alia, the Applicants.

10

The Applicants draw attention to two features which are common to both assignments:

i) That each assignment requires the relevant office holders to provide reasonable access to the books and records of each of the assignors to the Claimant in order for the Claimant to be able to investigate and pursue claims.

ii) That the relevant assignor is entitled to deferred consideration contingent on the success of the claims assigned.

11

DAC Beachcroft sent a letter before action dated 29 June 2023 to the Applicants asserting the claims which have been brought in this Claim (“the Pre-Revie LBA”). The claims were then valued at about £42 million. The Pre-Revie LBA was accompanied by a number of documents but which the Applicants assert are of little or no relevance to the claim. The Applicants acknowledged the Pre-Revie LBA by a letter dated 05 July 2023 and indicated that the Applicants would respond within three months, namely by 29 September 2023, the maximum period permitted in the Practice Direction on Pre-Action Conduct and Protocols.

12

On 06 September 2023, DAC Beachcroft sent a second letter before action (“the Post-Revie LBA”) to the Applicants asserting claims of about £35 million against the Applicants in relation to events following the completion of Project Revie.

13

The Applicants acknowledged the Post-Revie LBA on 18 September 2023 and stated that, given the overlap between the two claims, they proposed to respond to both letters on or before 12 January 2024.

14

The Applicants sent letters dated 18 September 2023 seeking the provision of documents from the Claimant in order to respond to the Pre-Revie LBA and a stay until 28 March 2024. The Applicants listed 62 categories of documents, which they requested in connection with the Pre-Revie LBA.

15

In relation to the Applicants' document requests generally, it is the Applicants' position that they have limited documents themselves from the time when they were employed by the First Defendant and then Extentia and that they have a limited recollection of events due to the passage of time. They say the documents requested by them are required to enable them to have a fair opportunity to respond to the Particulars of Claim in their Defence.

16

The Claimant rejected the Applicants' disclosure requests by a letter dated 04 October 2023 and proposed a shorter stay until 13 February 2024. On 23 October 2023, the Applicants complained about the disclosure provided to-date and required the Claimant to serve the Claim Form, which it did on 30 October 2023.

17

Both the Applicants and the First Defendant filed Acknowledgments of Service indicating an intention to defend the proceedings. However, by a letter dated 09 November 2023, the First Defendant's solicitors indicated that the First Defendant's liquidators (“the Liquidators”) were not in a position to serve a defence on behalf of the First Defendant or participate meaningfully in the proceedings.

18

On 06 December 2023, the Claimant provided the Applicants with a detailed response to their disclosure requests including outlining what documents had already been provided and providing some more of the requested documents but also explaining why other requests were refused. What stands out from the Claimant's letter of 06 December 2023 is the breadth of the disclosure sought by the Applicants and that by this date, the Claimant has provided disclosure of documents including verification notes, final copies of the Scheme of Arrangement, Share Purchase Agreement and Shore Capital Research Note, verification bundle, board reports and papers covering the period from January 2017 to February 2018 as well as board minutes between January 2017 and March 2018, various annual reports and accounts for the financial year 2016 and half year 2017, the commercial and financial due diligence reports.

19

The Claimant served the Particulars of Claim on 27 December 2023 together with an Initial Disclosure Certificate and Initial Disclosure. The parties agreed an extension of time for the Defendants (including the Applicants) to serve their Defences until 21 February 2024. When the Applicants agreed the extension of time for the service of their Defence, the Applicants did not indicate that the extended deadline was subject to further disclosure from either the Claimant or the First Defendant.

20

On 15 February 2024, the Claimant provided the Applicants with copies of the Cost Value Reconciliations which formed the basis of a spreadsheet included in Initial Disclosure.

21

On 12 February 2024, Addleshaw Goddard (on behalf of the Liquidators) wrote to the other parties noting that the Liquidators would provide the Applicants with the same documents as they had shared with the Claimant in respect of the Claim.

22

The Applicants welcomed the Liquidators' decision but contended that it did not go far enough. The Claimant opposed the Liquidators' decision.

23

On 20 February 2024, the Claimant suggested as a compromise on disclosure that the Liquidators should provide the Applicants with a copy of their mailboxes.

24

On 24 April 2024, the Liquidators wrote making proposals for the provision of documents to the Applicants. I understand that:

i) There are some 700,000 documents, which the Applicants...

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